Endeavour reports record Q2-2021 results

London, UNITED KINGDOM


 

ENDEAVOUR REPORTS RECORD Q2-2021 RESULTS;
WELL POSITIONED TO ACHIEVE TOP-HALF OF FULL YEAR PRODUCTION GUIDANCE

OPERATIONAL AND FINANCIAL HIGHLIGHTS

  • Q2-2021 production up 18% over Q1-2021 to 409koz, while AISC decreased by $15/oz to $853/oz
  • Strong H1-2021 performance of 756koz at an AISC of $860/oz positions the Group well to meet the top half of its FY-2021 production guidance of 1,365-1,495koz at an AISC of $850-900/oz
  • Adjusted Net Earnings (from cont. operations) of $183m or $0.73/share in Q2-2021; $276m or $1.20/share in H1-2021
  • Operating Cash Flow before working capital (from cont. operations) of $286m or $1.13/share in Q2-2021; $549m or $2.39/share in H1-2021
  • Healthy balance sheet at quarter-end with Net Debt to adjusted EBITDA leverage ratio of 0.07x; Net Debt decreased by $85m during the quarter to $77m and gross debt decreased by $120m
SHAREHOLDER RETURNS PROGRAMME

  • First dividend of $60m paid on 5 February 2021 for the 2020 fiscal year
  • Declaration of H1-2021 interim dividend of $70m, with record date set at 10 September 2021; well positioned to deliver more than the minimum committed dividend of $125m for the full year
  • Share buybacks continue to supplement shareholder returns with a total of $70m of shares repurchased since April 2021, $59m of which were repurchased in Q2-2021
ORGANIC GROWTH
  • Construction of Sabodala-Massawa Phase 1 expansion on schedule for completion by year-end; DFS underway for Sabodala-Massawa Phase 2 expansion, Fetekro, and Kalana projects
  • Group on track to discover over 2.5Moz of Indicated resources in 2021; significant discoveries recently made at Ity, Houndé, Sabodala-Massawa and Fetekro

London, 4 August, 2021 – Endeavour Mining plc (LSE:EDV, TSX:EDV, OTCQX:EDVMF) ('Endeavour' or the 'Group' or the 'Company') is pleased to announce its financial and operating results for Q2-2021 and H1-2021, with highlights provided in Table 1 below. Management will host a conference call and webcast on Wednesday 4 August, at 8:30 am ET / 1:30 pm BST. For instructions on how to participate, please refer to the conference call and webcast section at the end of the news release.

Table 1: Consolidated Highlights1

All amounts in US$ million, unless otherwise stated THREE MONTHS ENDED SIX MONTHS ENDED    
30 June 2021 31 March 2021 30 June 2020 30 June 2021 30 June 2020 Δ H1-2021 vs. H1-2020  
 
OPERATING DATA              
Gold Production, koz 409 347 149 756 321 +136%  
All-in Sustaining Cost2, $/oz 853 868 941 860 916 (6)%  
Realised Gold Price, $/oz 1,791 1,749 1,680 1,771 1,603 +10%  
CASH FLOW FROM CONTINUING OPERATIONS3              
Operating Cash Flow Before Changes in Working Capital 286 263 75 549 170 +223%  
Operating Cash Flow Before Changes in Working Capital2, $/share 1.13 1.27 0.67 2.39 1.54 +55%  
Operating Cash Flow 300 207 53 507 153 +231%  
Operating Cash Flow2, $/share 1.19 0.99 0.48 2.21 1.38 +60%  
PROFITABILITY FROM CONTINUING OPERATIONS3              
EBITDA2 363 333 23 696 124 +461%  
Adjusted EBITDA2 400 306 99 706 206 +243%  
Net Earnings/(loss) Attributable to Shareholders2 127 87 (38) 213 (22) (1068)%  
Net Earnings per Share, $/share 0.50 0.42 (0.35) 0.93 (0.20) (565)%  
Adjusted Net Earnings Attributable to Shareholders2 183 93 49 276 74 +273%  
Adjusted Net Earnings per Share2, $/share 0.73 0.45 0.44 1.20 0.66 +82%  
SHAREHOLDER RETURNS              
Dividends paid 60 60 n.a.  
Share buyback (commenced in Q2-2021) 59 59 n.a.  
FINANCIAL POSITION HIGHLIGHTS              
Net Debt/(Net Cash)2 77 162 473 77 473 (84)%  
Net (Cash)/Debt / Adjusted EBITDA (LTM) ratio2,4 0.07 0.16 1.00 0.07 1.00 (93)%  

1All amounts include Teranga assets from 10 February, 2021 2This is a non-GAAP measure. Refer to the non-GAAP measure section of the Management Report. 3From Continuing Operations excludes the Agbaou mine which was divested on 1 March, 2021. 4LTM means last twelve months.

Sebastien de Montessus, President and CEO, commented: “Our strong Q2 performance positions us well to achieve the top half of our production guidance for the full year, as all our mines are continuing to perform well and we have quickly integrated the Teranga assets within our business.

Our strong free cash flow generation has significantly improved our balance sheet strength and bolstered our ability to reward shareholders. We paid our first dividend of $60 million in Q1 for the 2020 fiscal year, and today we are declaring an interim dividend of $70 million for H1-2021, placing us on track to deliver more than the guided minimum dividend of $125 million for the full year. Given our near zero Net Debt to adjusted EBITDA leverage ratio, we have been supplementing our shareholder return programme with share buybacks, having repurchased $70 million of shares since April.

Our growth pipeline continues to develop with the Sabodala-Massawa phase 1 expansion on track to be completed in Q4-2021 while Definitive Feasibility Studies are progressing well for the Sabodala-Massawa Phase 2 expansion, Fetekro, and Kalana projects.

We have enjoyed further exploration success, with significant discoveries made at Ity, Houndé, Sabodala-Massawa and Fetekro, where updated resources are expected to be published later this year. Overall, the group is on track to delineate over 2.5 million ounces of Indicated resources in 2021, which represents significantly more than the expected annual depletion and contributes to our portfolio’s longevity.

We are also very pleased to have successfully completed our listing on the premium-segment of the London Stock Exchange in June and remain on track to be included into the UK and European indexes.

These achievements leave Endeavour well positioned for the remainder of the year and beyond.”

UPCOMING CATALYSTS

The key upcoming expected catalysts are summarized in the table below.

Table 2: Key Upcoming Catalysts

TIMING CATALYST  
Q3-2021 Exploration 5-year exploration strategy
Q4-2021 Sabodala-Massawa Completion of Phase 1 plant upgrades
Q4-2021 Sabodala-Massawa Completion of Definitive Feasibility Study for Phase 2
Q4-2021 Fetekro Completion of Definitive Feasibility Study
Q1-2022 Kalana Completion of Definitive Feasibility Study

LONDON STOCK EXCHANGE LISTING

  • Endeavour’s premium listing on the London Stock Exchange (“LSE”) was successfully completed on 14 June 2021, positioning Endeavour as the largest pure-play gold producer listed on the premium segment of the LSE.
  • Endeavour is well positioned to be included in the upcoming FTSE Russell index quarterly review based on its recent re-domicile to the UK and subject to its trading liquidity being above the required threshold. Membership changes to the indices are expected to be communicated by FTSE Russell on 1 September 2021 with potential inclusion becoming effective on the 20 September 2021.
  • In addition, Endeavour expects to be eligible for inclusion in the MSCI Europe index, with index rebalancing occurring on 30 November 2021 following the semi-annual review which is expected to be completed by mid-November.

SHAREHOLDER RETURNS PROGRAM

  • As disclosed on 7 June 2021, Endeavour has implemented a shareholder returns programme that is composed of a minimum progressive dividend that may be supplemented with additional dividends and buybacks, providing the prevailing gold price remains above $1,500/oz and that Endeavour’s leverage remains below 0.5x Net Debt / adjusted EBITDA.
  • The minimum progressive dividend policy has a target of distributing at least $500 million to shareholders over the next three years. Minimum dividends are set at $125 million, $150 million and $175 million for FY-2021, FY-2022, and FY-2023 respectively, payable semi-annually, significantly higher than our inaugural FY-2020 dividend of $60 million.
  • Endeavour is pleased to declare its H1-2021 interim dividend of $70 million or $0.28 per share based on its current issued share capital, which represents 56% of the minimum dividend for FY-2021, highlighting its strong commitment to paying supplemental shareholder returns. The ex-dividend date for the interim dividend will be 9 September 2021 and the record date will be 10 September 2021. The dividend will be paid on or about 28 September 2021 (the “Payment Date”).
  • Shareholders of shares traded on the Toronto Stock Exchange will receive dividends in Canadian Dollars (“CAD”), but can elect to receive United States Dollars (“USD”). Shareholders of shares traded on the London Stock Exchange will receive dividends in USD, but can elect to receive Pounds Sterling (“GBP”). Certificated shareholders will receive dividends in USD but can elect to receive dividends in GBP or CAD. Currency elections must be made by shareholders prior to 17:00 GMT on 13 September 2021. Dividends will be paid in the default or elected currency on the Payment Date, at the prevailing USD:CAD and USD:GBP exchange rates on 15 September 2021. This dividend does not qualify as an “eligible dividend” for Canadian income tax purposes. The tax consequences of the dividend will be dependent on the particular circumstances of a shareholder.
  • Shareholder returns are being supplemented through the Company’s share buyback programme. A total of $70 million of shares have been repurchased since the start of the buyback programme on 9 April 2021 until end of July 2021, of which $59 million or 2.7 million shares were repurchased in Q2-2021.

ON TRACK TO ACHIEVE FY-2021 GUIDANCE

  • Strong H1-2021 performance of 756koz at an AISC of $860/oz positions the Group well to meet the top-half of its FY-2021 production guidance of 1,365-1,495koz at an AISC of $850-900/oz.
  • H2-2021 will benefit from the full consolidation of the Sabodala-Massawa and Wahgnion mines, which have been consolidated starting from the closing date of the Teranga Gold acquisition of 10 February 2021.
  • Group sustaining and non-sustaining capital expenditure outlook for FY-2021 remains in line with initial guidance of $173 million and $201 million, respectively.

Table 3: H1-2021 Performance vs. FY-2021 Guidance

  H1-2021 2021 FULL YEAR GUIDANCE
Production, koz 756 1,365 1,495
AISC, $/oz 860 850 900

CASH FLOW AND LIQUIDITY SUMMARY

The table below presents the cash flow and Net Debt position for Endeavour for the three and six month period ending 30 June, 2021, with accompanying notes below.

Table 4: Cash Flow and Net Debt Position

    THREE MONTHS ENDED SIX MONTHS ENDED
In US$ million unless otherwise specified   30 June 2021 31 March 2021 30 June 2020 30 June 2021 30 June 2020
Net cash from (used in), as per cash flow statement:            
Operating cash flows before changes in working capital from cont. operations   286    263    75    549    170   
Changes in working capital   15    (57)   (21)   (42)   (17)  
Cash generated from/(used by) discontinued operations     (9)     (9)   30   
Cash generated from operating activities (Note 1) 300    198    57    498    183   
Cash used by investing activities (Note 2) (137)   (105)   (48)   (243)   (105)  
Cash (used in)/generated from financing activities (Note 3) (192)   65    (16)   (127)   84   
Effect of exchange rate changes on cash   (7)   (4)     (10)    
INCREASE/(DECREASE) IN CASH   (35)   154    (6)   118    162   
Cash position at beginning of period   868    715    357    715    190   
CASH POSITION AT END OF PERIOD (Note 4) 833    868    352    833    352   
Equipment financing       (64)     (64)  
Convertible senior bond   (330)   (330)   (330)   (330)   (330)  
Drawn portion of corporate loan facility (Note 5) (580)   (700)   (430)   (580)   (430)  
NET DEBT/ (CASH) POSITION (Note 6) 77    162    473    77    473   
Net Debt / Adjusted EBITDA (LTM) ratio1 (Note 7) 0.07  x 0.16  x 1.00  x 0.07  x 1.00  x

1Net Debt and Adjusted EBITDA are Non-GAAP measures. Refer to the non-GAAP measure section of the Management Report.


NOTES:

1)   Operating cash flows increased by $102.5 million from $197.9 million (or $0.99 per share) in Q1-2021 to $300.5 million (or $1.19 per share) in Q2-2021 mainly due to higher gold sales at a higher realised price as well as lower operating costs and a working capital inflow, which more than offset the higher income taxes paid and the foreign exchange losses incurred. Operating cash flow before non-cash working capital from all operations increased by $22.2 million from $263.4 million (or $1.27 per share) in Q1-2021 to $285.7 million (or $1.13 per share) in Q2-2021. Notable variances are summarised below:

  • Gold sales increased by 57koz over Q1-2021 to 421koz in Q2-2021 due to the benefit of a full quarter of production from the newly acquired Sabodala-Massawa and Wahgnion mines, together with strong performances at Houndé and Ity. The realised gold price for Q2-2021 was $1,791/oz compared to $1,749/oz for Q1-2021. Total cash cost per ounce decreased from $751/oz in Q1-2021 to $729/oz in Q2-2021 due to the inclusion of the lower cost Wahgnion and Sabodala-Massawa mines for the full quarter
  • Income taxes paid increased by $82.9 million to $106.5 million in Q2-2021 reflective of the timing of provisional payments based on full year 2020 earnings
  • Working capital was an inflow of $14.8 million in Q2-2021 due to the reduction in receivable balances and inventories. Specifically, VAT receivables at Houndé decreased and certain corporate receivables were received in Q2-2021. There was also a reduction in inventory stockpiles and finished gold inventories at Ity, Sabodala-Massawa and Wahgnion
  • Acquisition and restructuring costs of $14.5 million in Q2-2021 related to the Teranga acquisition and integration as well as restructuring costs

2)   Cash flows used by investing activities increased from Q1-2021 to $137.3 million in Q2-2021 due to increased expenditures on mining interest including sustaining capital and non-sustaining capital:

  • Sustaining capital from continuing operations increased by $13.9 million from Q1-2021 to $41.5 million in Q2-2021 due to higher sustaining capital at Boungou, Houndé and Ity primarily due to planned waste capitalisation
  • Non-sustaining capital from continuing operations increased slightly in Q2-2021 to $58.3 million, due to increases at Wahgnion and increases in non-mining capital expenditure which were mostly offset by decreases at Ity, Mana and Houndé
  • Growth capital spend decreased by $15.4 million from Q1-2021 to $12.6 million in Q2-2021 and primarily relates to the Massawa expansion with the remainder for ongoing Definitive Feasibility Studies (“DFS”) studies

3)   Cash flows used by financing activities increased by $256.4 million to $191.8 million in Q2-2021 mainly due to a higher net repayment of long-term debt in Q2-2021, which was $120.0 million and payments for the acquisition of own shares, as part of the ongoing share buyback programme, of $59.5 million, which started in Q2-2021.

4)   At quarter-end, Endeavour’s liquidity remained strong with $832.9 million of cash on hand and $220.0 million undrawn of the RCF. The Company will seek to reduce its cash balance in the upcoming quarters by continuing to pay down its debt.

5)   Endeavour's corporate loan facility was increased from $430.0 million to $800.0 million in Q1-2021 to retire Teranga’s various higher cost debt facilities. In Q2-2021 $120.0 million was repaid on the facility with $580.0 million drawn on the facility at quarter-end.

6)   Net Debt amounted to $77.1 million at quarter-end, a decrease of $84.9 million during the quarter despite dividend payments of $60.0 million and $59.5 million of shares repurchased. In H1-2021, Net Debt increased by $152 million compared to the beginning of the year as approximately $332 million of Net Debt was absorbed from Teranga in Q1-2021.

7)   The Net Debt / Adjusted EBITDA (LTM) leverage ratio ended the quarter at a healthy 0.07x, down from 0.16x in Q1-2021, and well below the Company’s long-term target of less than 0.50x, which provides flexibility to continue to supplement its shareholder return programme while maintaining headroom to fund its organic growth. The ratio has improved by 93% from the corresponding period last year when the ratio stood at 1.00x.

EARNINGS FROM CONTINUING OPERATIONS

The table below presents the earnings and adjusted earnings for Endeavour for the three and six month period ending 30 June, 2021, with accompanying notes below.

Table 5: Earnings from Continuing Operations

    THREE MONTHS ENDED SIX MONTHS ENDED
    30 June
2021
31 March
2021
30 June
2020
30 June
2021
30 June
2020
Revenue (Note 8) 753    636    210    1,389    436   
Operating expenses (Note 9) (278)   (253)   (83)   (531)   (179)  
Depreciation and depletion (Note 9) (158)   (132)   (35)   (290)   (78)  
Royalties (Note 10) (44)   (44)   (15)   (88)   (30)  
Earnings from mine operations   273    207    76    480    148   
Corporate costs (Note 11) (16)   (11)   (5)   (30)   (10)  
Acquisition and restructuring costs (Note 12) (15)   (12)   (3)   (27)   (7)  
Share-based compensation   (10)   (8)   (5)   (18)   (7)  
Exploration costs   (6)   (10)   (2)   (16)   (3)  
Earnings from operations   227    165    61    389    121   
(Loss)/gain on financial instruments (Note 13) (15)   42    (72)   27    (75)  
Finance costs   (14)   (12)   (12)   (26)   (23)  
Other (expense)/income   (7)   (6)   (2)   (11)   —   
Earnings before taxes   191    189    (25)   380    23   
Current income tax expense (Note 14) (44)   (72)   —    (117)   (19)  
Deferred income tax recovery/(expense)     (6)   (6)   (4)   (7)  
Net comprehensive earnings/(loss) from continuing operations (Note 15) 149    111    (31)   260    (3)  
Add-back adjustments (Note 16) 59    14    89    71    97   
Adjusted net earnings from continuing operations (Note 17) 208    125    59    331    94   
Portion attributable to non-controlling interests   25    32      54    20   
Adjusted net earnings from continuing operations attributable to shareholders of the Company (Note 17) 183    93    49    276    74   
Earnings/(loss) per share from continuing operations   0.50    0.40    (0.35)   0.93    (0.20)  
Adjusted net earnings per share from continuing operations   0.73    0.45    0.44    1.20    0.66   

NOTES:

8)   Revenue for Q2-2021 was $753.4 million compared to $635.8 million for Q1-2021. The increase in revenue in Q2-2021 was mainly due to higher gold sales in Q2-2021 due to the benefit of a full quarter of production from the newly acquired Sabodala-Massawa and Wahgnion mines, together with strong performances at Houndé and Ity and a higher realised gold price for Q2-2021 of $1,791/oz compared to $1,749/oz for Q1-2021.

9)   Operating expenses and depreciation and depletion increased for Q2-2021 compared to Q1-2021 due to the addition of the Wahgnion and Sabodala-Massawa mines, which were acquired on 10 February, 2021, for the full quarter.

10)   Royalties were $43.9 million for Q2-2021, compared to $44.4 million in Q1-2021. Royalty expenses remained stable as the decrease in realised gold price was offset by increased production from the Wahgnion and Sabodala-Massawa mines acquired on 10 February, 2021.

11)   Corporate costs were $15.9 million for Q2-2021 compared to $11.4 million for Q1-2021. The increase in corporate costs are primarily due to costs associated with listing on the LSE as well as additional corporate costs following the integration of Teranga.

12)   Acquisition and restructuring costs were $14.5 million in Q2-2021 compared to $12.2 million in Q1-2021. Costs slightly increased in Q2-2021 compared to the comparative period due to the acquisition of Teranga on 10 February 2021 and the costs related to the integration of the entity into the Endeavour Group.

13)   The loss on financial instruments was $14.8 million in Q2-2021 compared to a gain of $42.1 million in Q1-2021. The loss in Q2-2021 is mainly due to the net impact of a loss on change in fair value of the warrant liabilities and call rights of $5.3 million and $7.0 million respectively, and foreign exchange losses of $7.2 million. The gain in Q1-2021 is primarily due to the net impact of the unrealised gain/(loss) on convertible senior bond derivative of $30.0 million, loss on foreign exchange of $6.2 million, and a loss on change in fair value of warrant liabilities of $1.5 million.

14)   Current income tax expense was $44.5 million in Q2-2021 compared to $72.1 million in Q1-2021. Current income tax expense for Q2-2021 decreased compared to Q1-2021, despite the inclusion of the Wahgnion and Sabodala-Massawa mines acquired in Q1-2021, due to an adjustment to the income tax accrual upon finalisation of the FY-2020 income tax filings. Income taxes paid of $106.5 million in Q2-2021 were materially higher than income taxes expensed reflecting higher provisional payments made at the end of the 2020/2021 tax year.

15)   Net comprehensive earnings were $148.9 million for Q2-2021 compared to $110.9 million in Q1-2021. The increase in earnings was related to higher earnings from mine operations due to the addition of Wahgnion and Sabodola-Massawa, as well as a lower income tax expense, which contained one-off expenses related to the divestment of Agbaou in Q1-2021.

16)   Adjustments relate mainly to loss/(gain) on financial instruments, loss on discontinued operations, deferred income tax, share based compensation, non-recurring items and acquisition and restructuring costs.

17)   Adjusted Net Earnings attributable to shareholders for continuing operations were $183.1 (or $0.73 per share) in Q2-2021 compared to  $93.2 million (or $0.45 per share) in Q1-2021.

OPERATIONS REVIEW SUMMARY

  • Continued strong safety record for the Group, with a Lost Time Injury Frequency Rate (“LTIFR”) of 0.16 for the trailing twelve months ending 30 June, 2021.
  • The acquisition of Teranga Gold was completed on 10 February, 2021 and the Sabodala-Massawa and Wahgnion assets have been consolidated into the financial statements from this date. The sale of Endeavour's non-core Agbaou mine closed on 1 March, 2021, and has been classified as a discontinued operation.
  • A stronger than guided performance was achieved in Q2-2021 due to outperformance at Houndé and Ity which benefited from less rainfall than usual.
  • Production increased 18% in Q2-2021 over Q1-2021 to 409koz, while AISC decreased by $15/oz to $853/oz, due to the full benefit of consolidated production from Sabodala-Massawa and Wahgnion, and the strong operational performance as noted above.

Table 6: Consolidated Group Production

  THREE MONTHS ENDED SIX MONTHS ENDED
  30 June 2021 31 March 2021 30 June 2020 30 June 2021 30 June 2020
(All amounts in koz, on a 100% basis)
Boungou 39    60    —    99    —   
Houndé 80    66    57    146    113   
Ity 79    71    47    150    108   
Karma 25    22    20    47    48   
Mana 49    52    —    102    —   
Sabodala-Massawa1 96    39    —    135    —   
Wahgnion1 41    25    —    66    —   
PRODUCTION FROM CONTINUING OPERATIONS 409    334    125    743    269   
Agbaou2 —    13    24    13    52   
GROUP PRODUCTION 409    347    149    756    321   

1Included for the post acquisition period commencing 10 February, 2021. 2Divested on 1 March, 2021.

Table 7: Consolidated All-In Sustaining Costs1

(All amounts in US$/oz) THREE  MONTHS ENDED SIX MONTHS ENDED  
30 June 2021 31 March 2021 30 June 2020 30 June 2021 30 June 2020  
 
Boungou 950    690    —    793    —     
Houndé 741    839    965    787    1,020     
Ity 806    786    789    796    707     
Karma 1,070    1,179    951    1,120    889     
Mana 1,016    954    —    982    —     
Sabodala-Massawa1 637    749    —    675    —     
Wahgnion1 980    780    —    903    —     
Corporate  G&A 25    31    34    28    32     
Sustaining exploration —    —    —    —    —     
AISC FROM CONTINUING OPERATIONS 853    858    938    855    909     
Agbaou2 —    1,131    955    1,131    953     
GROUP AISC 853    868    941    860    916     

1Included for the post acquisition period commencing 10 February, 2021. 2Divested on 1 March 2021.

OPERATING ACTIVITIES BY MINE

Boungou Gold Mine, Burkina Faso

Table 8: Boungou Performance Indicators

For The Period Ended Q2-2021 Q1-2021 Q2-2020   H1-2021 H1-2020
Tonnes ore mined, kt 350    246    —      596    —   
Total tonnes mined, kt 8,347    6,672    —      15,018    —   
Strip ratio (incl. waste cap) 22.82    26.11    —      24.18    —   
Tonnes milled, kt 336    315    —      651    —   
Grade, g/t 3.84    5.52    —      4.65    —   
Recovery rate, % 95    96    —      95 —   
PRODUCTION, KOZ 39    60    —      99    —   
Total cash cost/oz 714    619    —      657    —   
AISC/OZ 950    690    —      793    —   

Q2-2021 vs Q1-2021 Insights

  • Gold production significantly decreased relative to Q1-2021, as greater throughput was offset by lower grades. Mining and mill feed was constrained to lower grade areas as the larger mining fleet was focused on waste extraction at the East pit.
    • Total tonnes mined was higher following the commissioning of additional mining equipment during Q1-2021. Mining activities continued to focus on the West pit with total tonnes of ore mined increasing as a result of the lower strip ratio and the benefit of mining on the top benches. Pre-stripping activities at the East pit continued during Q2-2021.
    • Tonnes milled increased in Q2-2021 relative to Q1-2021 as higher mill utilisation resulted from improved mining fragmentation of the ore, as well as the benefit of improvements made to the SAG mill, pebble crusher and vertical tower mill which started in Q4-2020 following the restart of mining.
    • Average processed grade decreased during Q2-2021 as the mill feed was mainly sourced from the lower grade areas of the West Pit, as the higher grade areas were targeted during the restart of mining activities in Q4-2020 and Q1-2021.
  • AISC per ounce increased during Q2-2021 compared to Q1-2021 due to the decrease in head grade and higher sustaining capital (an increase of $165 per ounce) due to waste stripping. Unit mining and unit processing costs decreased due to increased efficiencies as a result of additional mining equipment commissioned in Q1-2021 and improved mining fragmentation.
  • Sustaining capital expenditures of $9.0 million during Q2-2021 mainly related to waste capitalisation at the West pit and the TSF lift.
  • Non-sustaining capital expenditure of $3.9 million during Q2-2021 mainly related to pre-stripping at the East pit.

2021 Outlook

  • Boungou is well positioned to meet its FY-2021 production guidance of 180 - 200koz, while AISC are expected to continue to trend above the guided $690 - 740 per ounce range as a result of higher fuel prices and increased security costs.
  • Plant feed is expected to continue to be sourced from the West Pit with waste stripping activities continuing at the East Pit throughout the year. Mill throughput is expected to remain broadly consistent with H1-2021 performance, along with average processed grades, while recovery rates are expected to slightly decline due to the ore characteristics.
  • The sustaining capital spend outlook for FY-2021 remains unchanged compared to the initial guidance of $19.0 million, of which $13.1 million has been incurred in H1-2021. The non-sustaining capital spend outlook for FY-2021 also remains unchanged compared to the initial guidance of $22.0 million, of which $8.4 million has been incurred in H1-2021.

Houndé Gold Mine, Burkina Faso

Table 9: Houndé Performance Indicators

For The Period Ended Q2-2021 Q1-2021 Q2-2020   H1-2021 H1-2020
Tonnes ore mined, kt 1,399    1,625    1,072      3,024    1,972   
Total tonnes mined, kt 11,717    13,937    11,509      25,654    22,820   
Strip ratio (incl. waste cap) 7.38    7.58    9.73      7.48    10.57   
Tonnes milled, kt 1,108    1,147    1,035      2,254    2,101   
Grade, g/t 2.47    1.89    1.91      2.17    1.83   
Recovery rate, % 92    91    92      92    91   
PRODUCTION, KOZ 80    66    57      146    113   
Total cash cost/oz 629    768    772      694    820   
AISC/OZ 741    839    965      787    1,020   

Q2-2021 vs Q1-2021 Insights

  • Production significantly increased due to higher average processed grades, as the high grade Kari Pump ore contributed a higher proportion of the mill feed during the quarter
    • Total tonnes mined decreased as a result of decreased availability of mining equipment, as scheduled maintenance and repairs were carried out, as well as mining progressing to deeper elevations. This contributed to the decrease in tonnes of ore mined as the strip ratio remained fairly constant over the previous quarter. Ore tonnes mined were primarily sourced from the Kari Pump and Vindaloo Centre deposits with mining at Vindaloo Main focusing on waste stripping.
    • Tonnes milled slightly decreased despite the higher proportion of oxide ore from the Kari Pump pit, as a result of an increase in interruptions to the grid power supply and the increased reliance on generators.
    • Average gold grade milled increased along with recoveries due to the increase in the proportion of high grade oxide ore sourced from Kari Pump and a localised nugget effect in the higher grade zones of Kari Pump.
  • AISC decreased, despite higher unit costs and sustaining capital spend, due to the increase in production from the higher grade oxide ore sourced from Kari Pump which resulted in increased gold sales. Mining unit costs increased due to scheduled maintenance, higher haulage costs associated with Kari Pump, and increased blasting and grade control drilling carried out during the quarter. Unit processing costs increased, despite an increase in oxide ore processed, due to higher power costs, as generator utilisation increased due to interruptions to the grid power supply.
  • Sustaining capital expenditure of $8.6 million during Q2-2021 mainly related to the waste capitalisation at Vindaloo Main.
  • Non-sustaining capital expenditure of $3.0 million during Q2-2021 mainly related to costs associated with the development of the Kari West mining area.

2021 Outlook

  • H1-2021 performance was stronger than scheduled due to good mining productivities achieved during the Kari Pump pre-stripping enabling, increased access to high grade oxide ore. As such, Houndé is on track to meet the top half of its FY-2021 production guidance of 240—260koz, with AISC expected to achieve the guided $855—905 per ounce range.
  • Mining activities in H2-2021 will continue to focus on Kari Pump, supplemented by contributions from Bouéré and Vindaloo Centre pits. Mining is expected to focus on lower grade areas during the wet season and as a greater focus is placed on waste stripping activities, primarily related to Vindaloo Main pit and Kari West where the pre-strip is expected to be completed in late 2021. Throughput is expected to slightly decline in H2-2021, while recovery rates are expected to remain similar to H1-2021 and processed grade is expected to be lower following the higher grades brought forward in Q2-2021.
  • The sustaining capital spend outlook for FY-2021 remains unchanged compared to the initial guidance of $39.0 million, of which $13.3 million has been incurred in H1-2021. The non-sustaining capital spend outlook for FY-2021 also remains unchanged compared to the initial guidance of $13.0 million, of which $9.7 million has been incurred in H1-2021.

Ity Gold Mine, Côte D’Ivoire

Table 10: Ity Performance Indicators

 

For The Period Ended Q2-2021 Q1-2021 Q2-2020   H1-2021 H1-2020
Tonnes ore mined, kt 1,877    2,105    1,650      3,982    3,559   
Total tonnes mined, kt 5,934    6,816    5,374      12,750    10,600   
Strip ratio (incl. waste cap) 2.16    2.24    2.26      2.20    1.98   
Tonnes milled, kt 1,544    1,550    1,180      3,094    2,590   
Grade, g/t 1.96    1.76    1.59      1.86    1.61   
Recovery rate, % 81    79    77      80    81   
PRODUCTION, KOZ 79    71    47      150    108   
Total cash cost/oz 720    715    740      718    676   
AISC/OZ 806    786    789      796    707   

Q2-2021 vs Q1-2021 Insights

  • Production was ahead of expectation due to the increased average processed grade and gold recovery rate as higher grade ore was brought forward in the mine plan
    • Total tonnes mined, together with total ore mined, decreased in Q2-2021, due to a decrease in mining equipment availability, as scheduled maintenance was carried out on the excavators. The strip ratio also remained relatively stable. Mining activity continued at the Ity, Bakatouo, Daapleu, Walter, Colline Sud and Flotouo pits with an increase in ore being sourced from the heap dumps.
    • Tonnes milled continued to perform above nameplate capacity due to high plant uptime as well as a high proportion of oxide materials from the Daapleu, Bakatouo, Colline Sud pits and the heap dumps, with fresh ore sourced from Daapleu, Bakatouo and Ity pits.
    • Average gold grade milled increased in Q2-2021 due to an increase in the grade of the ore sourced from the Daapleu and Bakatouo pits.
    • Despite the higher proportion of transitional and fresh ore processed in Q2-2021, recovery rates increased, as higher quality material from Flotouo was treated preferentially displacing the more viscous Verse Ouest material.
  • AISC per ounce increased due to higher unit mining costs as a result of longer hauling distance for ore mined from the newly commissioned Flotouo and Walter pits as well as the transition to contractor mining. In addition, unit processing costs increased due to the increase in the proportion of transitional and fresh material and the higher reagent consumption due to an increase in the proportion of Daapleu ore processed. Higher power costs impacted AISC by approximately $20/oz due to increased utilisation of generators as a result of temporarily reduced grid power availability. The cost increase was also impacted by higher sustaining capital expenditure.
  • Sustaining capital expenditures of $7.1 million during Q2-2021 mainly relates to waste capitalisation at the Ity, Bakatouou and Daapleu pits.
  • Non-sustaining capital expenditures of $8.4 million during Q2-2021 mainly relates to the TSF stage 3 lift, the Le Plaque haul road construction and river diversions as well as small processing plant upgrades.
  • During Q2-2021, Ity transitioned from owner mining to contract mining with Societe de Forage et des Travaux Publics (“SFTP”), a local contractor who are already performing contract mining services at Endeavour’s Karma and Boungou mines. As a part of the transition, the mining fleet at Ity was sold to SFTP for approximately $24.2 million.

2021 Outlook

  • H1-2021 performance was stronger than scheduled due to the benefit of a good processing performance with a combination of higher throughput, grade, and recovery. As such, Ity is on track to meet the top half of its FY-2021 production guidance of 230—250koz, with AISC expected to achieve the top-end of the guided $800—850 per ounce range
  • Waste extraction activities are expected to ramp up at the Ity pit in H2-2021 as stripping which was deferred from H1-2021 is carried out. As a result, the proportion of ore mined from Bakatouo, Daapleu and Colline Sud is expected to decrease in H2-2021. Throughput is expected to be slightly lower in H2-2021 compared to H1-2021 due to the onset of the wet season, while the average processed grade is expected to be lower due to a higher proportion of feed from historical lower grade stockpiles.
  • The sustaining capital spend outlook for FY-2021 remains unchanged compared to the initial guidance of $28.0 million, of which $12.3 million has been incurred in H1-2021. Non-sustaining capital spend for FY-2021 is expected to amount to approximately $40.0 million, of which $20.4 million has been incurred in H1-2021. This increase compared to the initial H1-2021 guidance of $27.0 million is due to initiation of new optimization initiatives, primarily associated with reducing reagent consumption and enhancing recoveries.

Karma Gold Mine, Burkina Faso

Table 11: Karma Performance Indicators

For The Period Ended Q2-2021 Q1-2021 Q2-2020   H1-2021 H1-2020
Tonnes ore mined, kt 1,253    1,242    1,288      2,496    2,517   
Total tonnes mined, kt 6,212    5,146    4,802      11,358    9,755   
Strip ratio (incl. waste cap) 3.96    3.14    2.73      3.55    2.87   
Tonnes stacked, kt 1,267    1,380    1,238      2,647    2,352   
Grade, g/t 0.91    0.71    0.81      0.81    0.91   
Recovery rate, % 68    66    80      67    81   
PRODUCTION, KOZ 25    22    20      47    48   
Total cash cost/oz 1,059    1,169    856      1,110    834   
AISC/OZ 1,070    1,179    951      1,120    889   

Q2-2021 vs Q1-2021 Insights

  • Production increased due to the higher average grade stacked and the higher gold recovery rate, which offset a modest decrease in tonnes stacked.
    • Total tonnes mined increased slightly due to an additional load and haul unit, with an increase in strip ratio at GG1 as a higher proportion of transitional ore tonnes were mined. Ore continued to be sourced from the GG1 and Kao North pits.
    • Ore tonnes stacked decreased due to slightly lower stacking availability and utilisation. Ore tonnes from the GG1 and Kao North pit were mostly oxide material with a blend of transitional materials that were supplemented with stockpiles.
    • The stacked ore grade increased mainly due to a higher average grade sourced from the North Kao pit while the average grade from the GG1 pit also increased slightly.
    • The recovery rate increased due to the lower proportion of ore from the GG1 pit and the higher proportion of oxide material stacked, which has a higher associated recovery rate.
  • AISC per ounce decreased due to the increased production and associated gold sales which offset the higher mining strip ratio and higher unit processing and G&A costs. Processing unit costs were higher as a result of increased cyanide consumption and the lower Q2-2021 stacking capacity, while G&A unit costs increased as operation management patents taxes were incurred during the quarter.
  • Sustaining capital expenditure was $0.3 million during Q2-2021 and related to mining pit dewatering boreholes and other site equipment upgrades.
  • Non-sustaining capital expenditure was $2.1 million during Q2-2021, which was related to construction of new cells within the heap leach pad.

2021 Outlook

  • Given its strong H1-2021 performance, Karma is well positioned to meet its FY-2021 production guidance of 80—90koz at an AISC of $1,220—$1,300 per ounce
  • Mining activity is expected to focus on the GG1 pit for the remainder of the year. As a result of the increase in transitional material mined from the GG1 pit, processed grades and recoveries are expected to be lower in H2-2021, while ore stacked is expected to decrease in Q3-2021 due to the wet season, before returning to normal levels in Q4-2021
  • The sustaining capital outlook at Karma is expected to be significantly lower than the $11.0 million guided as a result of the waste development being included as an operating cost for 2021. The non-sustaining capital spend outlook for FY-2021 remains unchanged compared to the initial guidance of $5.0 million, of which $2.9 million has been incurred in H1-2021.

Mana Gold Mine, Burkina Faso

Table 12: Mana Performance Indicators

For The Period Ended Q2-2021 Q1-2021 Q2-2020   H1-2021 H1-2020
OP tonnes ore mined, kt 549    355    —      904    —   
OP total tonnes mined, kt 7,187    8,533    —      15,720    —   
OP strip ratio (incl. waste cap) 12.09    23.01    —      16.38    —   
UG tonnes ore mined, kt 214    245    —      459    —   
Tonnes milled, kt 670    604    —      1,275    —   
Grade, g/t 2.49    2.90    —      2.68    —   
Recovery rate, % 92    90    —      91    —   
PRODUCTION, KOZ 49    52    —      102    —   
Total cash cost/oz 911    907    —      909    —   
AISC/OZ 1,016    954    —      982    —   

Q2-2021 vs Q1-2021 Insights

  • Production slightly decreased due to a reduction in the average processed grade which was partially offset by an increase in plant throughput and recoveries.
    • Total open pit tonnes of ore mined was higher as a result of the lower strip ratio, following the planned waste development at the Wona South pit in Q1-2021, which provided access to a wider ore floor to be mined. In Q2-2021 ore was mainly sourced from Wona Main and Wona South Pits while mining at Wona North Stage 3 completed during Q1-2021.
    • Total underground ore tonnes mined decreased as underground mining focused on development and backfilling.
    • Tonnes milled increased due to an increase in mill availability and better mining fragmentation, which resulted in higher plant throughput. The ore processed in both Q1-2021 and Q2-2021 was mainly fresh material, sourced from both the open pit and underground mines.
    • The average processed grade was lower during Q2-2021 due to a decrease in the proportion of ore sourced from the higher grade underground mine and from the open pit Wona Main deposit.
  • AISC increased due to higher sustaining capital spend and increased open pit and underground unit mining costs. The open pit unit mining costs increased due to higher production drilling and blasting activities in the fresh ore areas of Wona South pit, as well as higher underground unit mining costs as a result of increased stope activity costs, which was partially offset by lower unit processing costs due to improved fragmentation.
  • Sustaining capital expenditure of $5.2 million during Q2-2021 mainly relates to underground development and waste capitalisation.
  • Non-sustaining capital of $21.1 million during Q2-2021 mainly relates to open pit waste development, the TSF raise and other infrastructure projects.


2021 Outlook

  • Given its strong H1-2021 performance driven by strong mill throughput and grades, Mana is well positioned to meet its FY-2021 production guidance of 170 - 190koz at an AISC of $975 - 1,050 per ounce
  • In H2-2021, ore will continue to be sourced from the Siou underground mine while open pit mining activities at Siou are expected to wind down. Following optimization studies completed in Q2-2021, Wona will be pursued as an underground operation rather than being continued as an open pit operation and eliminate the need for a large pit cut-back. Underground development at Wona will therefore be expedited, with decline development expected to commence in Q3-2021. Mill throughput and grades are expected to be slightly lower in H2-2021, compared to H1-2021, while recovery rates are expected to remain similar.
  • The total sustaining and non-sustaining capital spend outlook for FY-2021 remains unchanged. As a result of the reduction in required stripping activities at Wona, following the decision to shift to underground mining, the FY-2021 sustaining capital outlook is expected to be significantly lower than the $27.0 million guided, of which $8.0 million has been incurred in H1-2021. Due to the reallocation of capital for the Wona underground development, the non-sustaining capital outlook for FY-2021 is expected to amount to slightly more the $62.0 million guided, of which $45.2 million has been incurred in H1-2021.

Sabodala-Massawa Gold Mine, Senegal

Table 13: Sabodala-Massawa Performance Indicators

For The Period Ended Q2-2021 Q1-2021
(Consolidated)
Q1-2021   H1-2021
(Consolidated)
H1-2020
Tonnes ore mined, kt 2,111    1,056    1,622      3,167    —   
Total tonnes mined, kt 10,798    5,831    10,713      16,629    —   
Strip ratio (incl. waste cap) 4.11    4.52    5.62      4.25    —   
Tonnes milled, kt 1,067    550    1,027      1,617    —   
Grade, g/t 3.20    2.53    2.48      2.97    —   
Recovery rate, % 89    90    90      90    —   
PRODUCTION, KOZ 96    39    75      135    —   
Total cash cost/oz 548    564    n.a.   553    —   
AISC/OZ 637    749    n.a.   675    —   

Q2-2021 vs Q1-2021 Insights

  • Production increased in Q2-2021 compared to Q1-2021 (full quarter basis) mainly due to higher processed grades which more than offset the slightly lower recoveries.
    • Tonnes mined increased due to favourable mining conditions experienced in Q2-2021 as a result of the improved haul road profile, improved mining sequencing, additional equipment and increased productivity of shovels and excavators. Tonnes of ore mined increased due to the aforementioned reasons as well as the lower strip ratio. Mining activities in Q2-2021 continued to progress on the Massawa permit with Sofia Main and Sofia North contributing 70% and 30% of total ore mined respectively.
    • Total tonnes milled increased in Q2-2021, due to increased mill availability and utilisation, despite the increase in fresh material milled which resulted in a slight decrease in recoveries
    • The average processed grade for the period benefited from the high grade ore from the Sofia Main pit
  • AISC per ounce decreased in Q2-2021 compared to Q1-2021 (for post consolidation period commencing 10 February, 2021) mainly due to the decrease in the strip ratio and lower sustaining capital spend per ounce sold ($90/oz vs. $185/oz) and the lower processing unit cost which more than offset the higher unit mining costs (higher due to increased haulage cost).
  • Sustaining capital expenditure of $8.9 million during Q2-2021 mainly relates to purchases of additional mining equipment, TSF raise and planned waste capitalisation.
  • Non-sustaining capital expenditure of $5.2 million during Q2-2021 mainly relates to the relocation activities of the Sabodala village, the new haul road and infrastructure developments at the Massawa permit mining areas.

2021 Outlook

  • Given its strong H1-2021 performance, Sabodala-Massawa is well positioned to meet its FY-2021 production guidance of 310—330koz at an AISC of $690—740 per ounce, for the post acquisition period commencing on 10 February 2021.
  • The Sofia Main and Sofia North pits will continue to contribute the majority of the ore mined for the remainder of 2021, while waste extraction at Sofia North is expected to increase in H2-2021. Mill throughput and process grades are expected to slightly decrease in H2-2021, compared to Q2-2021, while recovery rates are expected to remain similar.
  • The sustaining capital spend outlook for FY-2021 is expected to be slightly above the previously guided $35.0 million, of which $18.4 million has been incurred in H1-2021, due to investments in mining fleet and additional equipment. The non-sustaining capital spend outlook for FY-2021 is expected to be slightly below the guided $47.0 million, of which $9.7 million has been incurred in H1-2021 due to the deferral of spend on the Sabodala relocation construction and development costs as a greater focus is placed on mining the Sofia pits.

Wahgnion Gold Mine, Burkina Faso

Table 14: Wahgnion Performance Indicators

For The Period Ended Q2-2021 Q1-2021
(Consolidated)
Q1-2021   H1-2021
(Consolidated)
H1-2020
Tonnes ore mined, kt 1,187    649    1,183      1,836    —   
Total tonnes mined, kt 7,615    4,451    7,751      12,066    —   
Strip ratio (incl. waste cap) 5.42    5.86    5.55      5.57    —   
Tonnes milled, kt 1,016    538    962      1,554    —   
Grade, g/t 1.31    1.35    1.46      1.32    —   
Recovery rate, % 95    94    95      95    —   
PRODUCTION, KOZ 41    25    43      66    —   
Total cash cost/oz 928    746    n.a.   858    —   
AISC/OZ 980    780    n.a.   903    —   

Q2-2021 vs Q1-2021 Insights

  • Production decreased in Q2-2021 compared to Q1-2021 (full quarter basis) despite higher mill throughput, due to the lower average grade processed
    • Total tonnes and ore mined remained fairly consistent. Ore mined was sourced mainly from the Nogbele North and Nogbele South pits and supplemented with ore from the Fourkoura pit where mining commenced earlier this year.
    • Tonnes milled increased as a result of planned maintenance which was carried out in Q1-2021, leading to increased mill availability in Q2-2021. The mill feed blend and recoveries remained consistent with Q1-2021, with minimal transitional ore and a 60/40 split between oxide and fresh ore.
    • Average grade milled decreased slightly as the proportion of lower grade ore sourced from the Nogbele South deposit increased during the quarter.
  • AISC per ounce increased in Q2-2021 compared to Q1-2021 (for post consolidation period commencing 10 February, 2021) mainly due to increased sustaining capital per ounce sold and higher unit mining and processing costs. Both mining and processing unit costs were higher as a result of increased fuel costs, with increased drilling and blasting and haulage costs also contributing to the higher unit mining cost.
  • Sustaining capital expenditure of $2.5 million during Q2-2021 mainly relates to waste capitalisation and other mining equipment and IT infrastructure upgrades.
  • Non-sustaining capital expenditure of $9.0 million during Q2-2021 mainly relates to the TSF stage 2 raise, construction of the airstrip and resettlement costs.

2021 Outlook

  • Given its strong H1-2021 performance, Wahgnion is well positioned to meet its FY-2021 production guidance of 140—155koz at an AISC of $940—990 per ounce, for the post acquisition period commencing on 10 February 2021.
  • Mining is expected to continue at Nogbele North, Nogbele South, and Fourkoura pits with significant waste development continuing throughout the year. Plant throughput is expected to decrease in H2-2021 compared to H1-2021 due to the wet season and a higher proportion of fresh ore being processed, while process grades are expected to increase and recovery rates to slightly decline.
  • The sustaining capital spend outlook for FY-2021 remains unchanged compared to the initial guidance of $14.0 million, of which $3.4 million has been incurred in H1-2021, with the remaining spend mainly related to waste extraction. The non-sustaining capital spend outlook for FY-2021 also remains unchanged compared to the initial guidance of $26.0 million, of which $12.8 million has been incurred in H1-2021. The H2-2021 non-sustaining spend mainly relates to construction of a second TSF cell.

EXPLORATION AND DEVELOPMENT ACTIVITIES

  • Exploration efforts remain on track to discover over 2.5 million ounces of Indicated resources in 2021, which represents significantly more than the expected depletion for the year.
  • Following significant exploration success in H1-2021, updated resource estimates are expected to be published in H2-2021 notably for Ity, Houndé, Sabodala-Massawa, and Fetekro.
  • A total of over 312,000 meters have been drilled across the group during H1-2021, amounting to a total spend of $50 million, which represents more than half the guided annual spend of $70-90 million as the exploration programme is more heavily weighted towards the first half of the year to take advantage of the dry season.

Table 15: Consolidated Exploration Expenditures1

(All amounts in US$m) H1-2021 2021 GUIDANCE
Sabodala-Massawa 4 ~13
Wahgnion 2 ~12
Ity 6 ~9
Mana 7 ~8
Houndé 7 ~7
Boungou 5 ~7
Karma 0 ~0
MINE SUBTOTAL 31 ~56
Greenfield and development projects 19 ~14 - 34
TOTAL 50 $70 - 90

1Consolidated exploration expenditures include expensed, sustaining, and non-sustaining exploration expenditures. Amounts may differ from Management Report due to rounding.

Boungou mine

  • An exploration programme of up to $7.0 million has been planned for 2021, of which $4.6 million was spent in H1-2021 consisting of 24,307 meters of drilling across 245 drillholes. The exploration efforts were focused on delineating near mine targets and the area between the East and West pit.
  • Drilling conducted in H1-2021 at Natougou NW identified a zone of higher-grade mineralisation trending north-northwest that extends for over 700 meters and remains open to the north. In H2-2021 drilling will focus on delineating this trend. Drilling at Natougou SE, Natougou SW and West Flanc targeted the extension of existing mineralised trends and the evaluation of inferred resources.
  • At Boungou NW, H1-2021 drilling evaluated the continuation of the Boungou Shear Zone mineralisation. Initial results are promising and a complete review of all drill results in H2-2021 will guide follow-up drilling in 2022. 

Houndé mine

  • An exploration programme of up to $7.0 million has been planned for 2021 of which $6.8 million was spent in H1-2021 consisting of 68,871 meters of drilling across 630 drillholes. The exploration efforts were focused on Vindaloo South, Mambo and the intersection between Kari Gap and Kari Center.
  • Drilling has confirmed that the Mambo target, located 12km from the Houndé plant, has the potential to be a significant discovery with mineralisation that extends over 800 meters in length and 200 meters wide and remains open to the southwest, northeast, and at depth. During H2-2021, step out drilling will target lateral extensions of Mambo to the southwest and northeast. A maiden resource at Mambo is expected to be published in H2-2021.
  • During H1-2021 exploration in the Kari Area and at Vindaloo South was focussed on delineating mineralised extensions which will be pursued in H2-2021. 

Ity mine

  • An exploration programme of $9.0 million has been planned for 2021 of which $6.2 million was spent in H1-2021 consisting of 45,144 meters of drilling across 441 drillholes. The exploration efforts were focused on Le Plaque South (Delta Extension), West Flotouo (Verse Ouest), Daapleu Deep, Yopleu-Legaleu and the junction between Bakatouo and Walter.
  • Drilling on the West Flotouo target, which was informed following a re-interpretation of structural and geological data, led to the discovery of a high grade mineralised lenses immediately below the former Flotouo dump, located in proximity to the plant. A maiden resource is expected to be published in late 2021.
  • Drilling in the Le Plaque area focussed on extending mineralisation at Le Plaque South and Yopleu-Legaleu. An updated Le Plaque resource is expected to be published in late 2021.
  • Drilling conducted at Daapleu confirmed that mineralisation extends at least 300 meters downdip of the current pit design and the target will be delineated further in H2-2021.
  • Drilling at the junction between the Bakatouo and Walter deposits confirmed mineralisation is continuous and that it remains open at depth, and will therefore be further explored in H2-2021. 

Karma mine

  • In H1-2021, exploration work was carried out as part of the advanced grade control drilling programme, with the aim of delineating near mine extensions and expediting their incorporation in the current mine plan. The focus was on Kao Main, Kao north, Rambo, GG1, GG2, Anomaly B and Kanongo, which will be pursued in H2-2021.

Mana mine

  • An exploration programme of up to $8.0 million has been planned for 2021 of which $7.1 million was spent in H1-2021 consisting of 59,620 meters of drilling across 459 drillholes. The exploration efforts were focused on oxide open pit targets, such as Maoula, and on evaluating underground targets at Siou and Nyafe.
  • Drilling conducted at Maoula confirmed and extended mineralisation in the western and eastern lenses of the deposit. In H2-2021, exploration work will continue to focus on defining indicated resources and extending the mineralised trend to the southwest, where the deposit remains open. Some delineation drilling was also conducted at Kona North, T2K and Bana West where generally lower grade and non-continuous mineralisation was intercepted.
  • Deeper drilling conducted at Siou South, intersected higher grade mineralised zones adjacent to the planned underground development. In H2-2021 further drilling will focus on delineating these higher grade zones.
  • At Nyafe, historic drilling and exploitation activities were largely restricted to defining and mining oxide ore due to the refractive nature of the sulphide mineralisation. Scout diamond holes drilled beneath the pits confirmed the down-dip continuation of the structures and higher grade mineralisation. Further drilling is planned to start in late 2021.

Sabodala-Massawa mine

  • An exploration programme of up to $13.0 million has been planned for 2021 of which $3.5 million was spent in H1-2021 consisting of 46,439 meters of drilling across 414 drillholes. The exploration efforts were focused on Samina, Tina and other non-refractory targets within the Massawa area. Following the exploration success, an updated resource is expected to be published in late 2021.
  • Drilling conducted at the Samina deposit focussed on extending the 500 meters mineralised strike length to over 900 meters, while mineralisation remains open to the north.
  • Drilling conducted at the Tina deposit focussed on expanding the inferred resources defined in 2019. The mineralised strike length has been extended by over 300 meters and the deposit remains open to the north and southeast.
  • Drilling conducted at the Sofia North deposit followed up on the previously identified Sofia North extension. The extension has been identified to extend over 800 meters along strike and is 150 meters wide, remaining open to the north.
  • During the remainder of 2021, exploration work will be focussed on defining resources at Samina, Tina and the Sofia North Extension as well as follow up drilling on other Massawa project area targets.

Wahgnion mine

  • An exploration programme of up to $12.0 million has been planned for 2021 of which $2.6 million was spent in H1-2021 consisting of 9,565 meters of drilling across 81 drillholes. The exploration efforts focused on Nogbele North and Nogbele South deposits, targeting the continuation of mineralised structures between the Nogbele pits.
  • Exploration efforts are expected to ramp up in H2-2021, and will continue to focus on the extension and expansion of the Nogbele mineralisation. Additionally, the north-northeast continuation of the Fourkoura deposit and the Hillside target will be tested for extensions. Reconnaissance drilling at various attractive targets such as Kafina West and Korindougou will also be completed in H2-2021.

Fetekro project

  • In H1-2021, Fetekro was the largest greenfield exploration focus with a total of $6.4 million spent on exploration work.
  • In total 43,300 meters of drilling were completed in H1-2021 and 54,117 meters have been completed since the last resource update, published in August 2020. An updated resource estimate is expected to be published in late 2021 due to successful drilling which has focused on extending the Fetekro resource into Lafigué North and in the area between Lafigué Center and Lafigué North.
  • At Lafigué North, the exploration programme focused on converting a portion of the remaining inferred resources into indicated resources. At the area between Lafigué Center and Lafigué North, infill drilling focused on delineating recently identified shallow, subparallel, stacked mineralised lenses located outside of the current resource.
  • The DFS remains on track to be completed by year-end 2021 with the mining permit expected to be granted in Q3-2021.

Kalana project

  • During H1-2021 optimisation of the pre-feasibility study continued, with a particular focus on ore sorting.
  • In H2-2021 PFS optimization work will continue along with work on advancing the resettlement site and completion of the Environmental Permit. The DFS remains on track to be completed in Q1-2022.

Afema exploration property

  • In H1-2021, Endeavour completed the initial exploration programme initiated by Teranga, drilling 8,347 meters at the Woulo Woulo prospect. Since its discovery in 2020, over 210 drill holes, totalling 31,492 meters of drilling have been completed at Woulo Woulo Main, Woulo Woulo West and Woulo Woulo East.
  • An initial resource of 4.196MT at 1.10g/t Au for 148,000 ounces of indicated resources and 3.175MT at 1.03g/t Au for 105,000 ounces of inferred resources have been defined at Woulo Woulo, with further work in H2-2021 focussed on expanding the mineralised trend and delineating other high priority targets within the Afema permit. For associated resource calculation technical notes, please reference the below section entitled “AFEMA’S WOULO-WOULO AREA RESOURCE MODELING”.
  • At Woulo Woulo Main the mineralised unit extends over 2.5 km and remains open along strike to the north and south and at depth. The host unit at Woulo Woulo is a highly fractured and veined altered felsic Intrusive which is observed to be approximately 40 to 50 meters thick, occasionally swelling to more than 80 meters in thickness. The mineralized global envelope appears to be quite continuous, with some thinner individual lenses. Higher grade mineralisation has been identified in the north and south extents of Woulo Woulo’s main mineralised unit, with average grades between 1.0 – 1.5g/t gold around the center.

Bantou exploration property

  • At Bantou, during H1-2021 exploration work on the Karankasso JV permits focussed on completing soil geochemical surveys and ground geophysical surveys to help advance high priority targets ahead of the Dynkikongolo permit approval, and the start of the resource conversion drilling programmes in H2-2021 on Bantou and Bantou North deposits.

Siguri exploration property

  • At Siguiri, a total of 23,000 meters of drilling will start in early H2-2021 on two promising targets that were selected in H1-2021.

CONFERENCE CALL AND LIVE WEBCAST

Management will host a conference call and webcast on Wednesday 4 August, at 8:30 am ET / 1:30 pm BST to discuss the Company's financial results.

The conference call and webcast are scheduled at:
5:30am in Vancouver
8:30am in Toronto and New York
1:30pm in London
8:30pm in Hong Kong and Perth

The webcast can be accessed through the following link:
https://edge.media-server.com/mmc/p/j5h3ojje

Analysts and investors are also invited to participate and ask questions using the dial-in numbers below:
International: +44 (0) 2071 928338
North American toll-free: +18778709135
UK toll-free: +44 (0) 8002796619

Confirmation Code: 2858954

The conference call and webcast will be available for playback on Endeavour's website.

QUALIFIED PERSONS

Clinton Bennett, Endeavour's VP Metallurgy and Process Improvement - a Fellow of the Australasian Institute of Mining and Metallurgy, is a "Qualified Person" as defined by National Instrument 43-101 - Standards of Disclosure for Mineral Projects ("NI 43-101") and has reviewed and approved the technical information in this news release.

CONTACT INFORMATION

Martino De Ciccio

VP – Strategy & Investor Relations

+44 203 640 8665

mdeciccio@endeavourmining.com
Brunswick Group LLP in London

Carole Cable, Partner

+44 7974 982 458

ccable@brunswickgroup.com
Vincic Advisors in Toronto

 

John Vincic, Principal

+1 (647) 402 6375

john@vincicadvisors.com
 

ABOUT ENDEAVOUR MINING CORPORATION

Endeavour Mining is one of the world’s senior gold producers and the largest in West Africa, with operating assets across Senegal, Cote d’Ivoire and Burkina Faso and a strong portfolio of advanced development projects and exploration assets in the highly prospective Birimian Greenstone Belt across West Africa.

A member of the World Gold Council, Endeavour is committed to the principles of responsible mining and delivering sustainable value to its employees, stakeholders and the communities where it operates. Endeavour is admitted to listing and to trading on the London Stock Exchange and the Toronto Stock Exchange, under the symbol EDV.

For more information, please visit www.endeavourmining.com.

This document represents Endeavour’s half-yearly report for the purposes of the Disclosure and Transparency Rules (“DTRs”) issued by the UK Financial Conduct Authority (DTR 4.2).

CAUTIONARY STATEMENT ON FORWARD-LOOKING INFORMATION

This document contains "forward-looking statements" within the meaning of applicable securities laws. All statements, other than statements of historical fact, are “forward-looking statements”, including but not limited to, statements with respect to Endeavour's plans and operating performance, the estimation of mineral reserves and resources, the timing and amount of estimated future production, costs of future production, future capital expenditures, the success of exploration activities, the anticipated timing for the payment of a shareholder dividend and statements with respect to future dividends payable to the Company’s shareholders, the completion of studies, mine life and any potential extensions, the future price of gold and the share buyback programme. Generally, these forward-looking statements can be identified by the use of forward-looking terminology such as "expects", "expected", "budgeted", "forecasts", "anticipates", believes”, “plan”, “target”, “opportunities”, “objective”, “assume”, “intention”, “goal”, “continue”, “estimate”, “potential”, “strategy”, “future”, “aim”, “may”, “will”, “can”, “could”, “would” and similar expressions .

Forward-looking statements, while based on management's reasonable estimates, projections and assumptions at the date the statements are made, are subject to risks and uncertainties that may cause actual results to be materially different from those expressed or implied by such forward-looking statements, including but not limited to: risks related to the successful integration of acquisitions or completion of divestitures; risks related to international operations; risks related to general economic conditions and the impact of credit availability on the timing of cash flows and the values of assets and liabilities based on projected future cash flows; Endeavour’s financial results, cash flows and future prospects being consistent with Endeavour expectations in amounts sufficient to permit sustained dividend payments; the completion of studies on the timelines currently expected, and the results of those studies being consistent with Endeavour’s current expectations; actual results of current exploration activities; production and cost of sales forecasts for Endeavour meeting expectations; unanticipated reclamation expenses; changes in project parameters as plans continue to be refined; fluctuations in prices of metals including gold; fluctuations in foreign currency exchange rates; increases in market prices of mining consumables; possible variations in ore reserves, grade or recovery rates; failure of plant, equipment or processes to operate as anticipated; extreme weather events, natural disasters, supply disruptions, power disruptions, accidents, pit wall slides, labour disputes, title disputes, claims and limitations on insurance coverage and other risks of the mining industry; delays in the completion of development or construction activities; changes in national and local government legislation, regulation of mining operations, tax rules and regulations and changes in the administration of laws, policies and practices in the jurisdictions in which Endeavour operates; disputes, litigation, regulatory proceedings and audits; adverse political and economic developments in countries in which Endeavour operates, including but not limited to acts of war, terrorism, sabotage, civil disturbances, non-renewal of key licenses by government authorities, or the expropriation or nationalization of any of Endeavour’s property; risks associated with illegal and artisanal mining; environmental hazards; and risks associated with new diseases, epidemics and pandemics, including the effects and potential effects of the global Covid-19 pandemic.

Although Endeavour has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking statements, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements. Please refer to Endeavour's most recent Annual Information Form filed under its profile at www.sedar.com for further information respecting the risks affecting Endeavour and its business.

The declaration and payment of future dividends and the amount of any such dividends will be subject to the determination of the Board of Directors, in its sole and absolute discretion, taking into account, among other things, economic conditions, business performance, financial condition, growth plans, expected capital requirements, compliance with the Company's constating documents, all applicable laws, including the rules and policies of any applicable stock exchange, as well as any contractual restrictions on such dividends, including any agreements entered into with lenders to the Company, and any other factors that the Board of Directors deems appropriate at the relevant time. There can be no assurance that any dividends will be paid at the intended rate or at all in the future.

NON-GAAP MEASURES

Some of the indicators used by Endeavour in this press release represent non-IFRS financial measures, including “all-in sustaining cost”, “net debt”, “adjusted EBITDA”, “cash flow from continuing operations”, “total cash cost per ounce” and “net earnings”. These measures are presented as they can provide useful information to assist investors with their evaluation of the pro forma performance. Since the non-IFRS performance measures listed herein do not have any standardized definition prescribed by IFRS, they may not be comparable to similar measures presented by other companies. Accordingly, they are intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. Please refer to the non-GAAP measures section of the Company’s most recently filed management discussion and Analysis for a reconciliation of the non-IFRS financial measures used in this press release.

AFEMA’S WOULO-WOULO AREA RESOURCE MODELING

The geological models, statistical analysis and resource estimates were prepared by Kevin Harris, CPG is Endeavour Mining's Vice President Resources and a Qualified Person as defined by NI 43-101. The Woulo-Woulo Mineral Resource Estimate (MREs) was developed within the Afema project area in Leapfrog Geo and Geovia Surpac software. Mineral Resource estimates follow the Canadian Institute of Mining, Metallurgy and Petroleum ("CIM") definitions standards for mineral resources and reserves and have been completed in accordance with the Standards of Disclosure for Mineral Projects as defined by National Instrument 43-101.

The mineralisation model for Woulo-Woulo was developed in Leapfrog Geo with the drilling data as of 18 June, 2021. Twelve mineralised domains were defined within the approximately 2.9 km strike length of the deposit defined so far. The gold assays from the drill holes were composited to one-meter intervals within the mineralised wireframes and capped by the mineralised domain, or not at all depending on the high-grade outliers within the individual lens. Four of the domains were capped at 10 g/t Au and the remainder were not capped. The spatial relationship of the gold grade distribution was analysed for each mineralized domain using directional variograms. The majority of the lenses showed a good continuity of gold grade along strike and down-dip and were used to establish ordinary kriging (“OK”) estimation parameters. Density parameters were determined by weathering zone. The saprolite is 1.8 t/m3, saprock is 2.2 t/m3 and fresh rock is 2.8 t/m3. The gold grade was estimated using Ordinary Kriging (OK), constrained by the mineralised domains. The grade was estimated in multiple passes to define the higher confidence areas and to extend the grade into areas of extrapolated mineralization. The grade estimation was validated by visually comparing drilling data and block grades, comparing inverse distance squared and OK estimated grades and by swath plots comparing block grades and composite grades.

No Measured resources have been estimated. The mineralisation was classified as Indicated and Inferred Mineral Resources depending on the sample spacing, number samples, confidence in mineralised zone continuity and geostatistical analysis. The Indicated Mineral Resource was defined by least three-drill holes within a 50 meter search using a minimum of 7 and a maximum of 20 samples. Inferred Mineral Resource classification was defined by a minimum of three samples within a 75 meter search.

The Mineral Resources were constrained by $1,500/oz gold price within a Whittle pit optimisation and a 0.50 g/t Au cut-off grade. The Whittle pit shell optimisations assumed a base mining cost of $2.50/t and an adjusted ore mining and haulage cost of $2.50/t for oxide, $3.25/t for transition and $3.75/t for fresh rock, a mining recovery of 95%, mining dilution of 10%, a pit slope of 40o, average gold recovery of 90%, a processing and G&A cost of $16.00/t for oxide, $18.00/t for transition and $20.00/t for fresh rock, and a gold selling cost (royalty, refining and selling) of $70/oz.

Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability.

Reported tonnage and grade figures have been rounded from raw estimates to reflect the relative accuracy of the estimate. Minor variations may occur during the addition of rounded numbers.

Corporate Office: 5 Young St, Kensington, London W8 5EH, UK

Table of Contents

MANAGEMENT REPORT  
1. BUSINESS OVERVIEW         3
1.1. OPERATIONS DESCRIPTION         3
2. HIGHLIGHTS FOR THE THREE AND SIX MONTHS ENDED 30 JUNE 2021         4
3. ENVIRONMENTAL, SOCIAL AND GOVERNANCE         5
3.1. HEALTH AND SAFETY         5
3.2. COVID-19 RESPONSE         6
4. OPERATIONS REVIEW         8
4.1 OPERATIONAL REVIEW SUMMARY         8
4.2. BOUNGOU GOLD MINE         9
4.3. HOUNDE GOLD MINE         11
4.4. ITY GOLD MINE         13
4.5. KARMA GOLD MINE         15
4.6. MANA GOLD MINE         17
4.7. SABODALA-MASSAWA GOLD MINE         19
4.8. WAHGNION GOLD MINE         21
4.9. DISCONTINUED OPERATIONS         23
5. FINANCIAL REVIEW         24
5.1. STATEMENT OF COMPREHENSIVE EARNINGS         24
5.2. SUMMARISED CASH FLOWS         26
5.3. SUMMARISED BALANCE SHEET         28
5.4. LIQUIDITY AND FINANCIAL CONDITION         29
5.5. RELATED PARTY TRANSACTIONS         30
5.6. ACCOUNTING POLICIES AND CRITICAL JUDGEMENTS         30
6. USE OF PROCEEDS         30
7. NON-GAAP MEASURES         31
7.1 ALL-IN MARGIN         31
7.2. ADJUSTED EBITDA         32
7.3. CASH AND ALL-IN SUSTAINING COST PER OUNCE OF GOLD SOLD         32
7.4. ADJUSTED NET EARNINGS AND ADJUSTED NET EARNINGS PER SHARE         35
7.5. OPERATING CASH FLOW PER SHARE         35
7.6. NET DEBT, NET CASH/ADJUSTED EBITDA RATIO         35
7.7. RETURN ON CAPITAL EMPLOYED         36
8. QUARTERLY AND ANNUAL FINANCIAL AND OPERATING RESULTS         37
9. PRINCIPAL RISKS AND UNCERTAINTIES         39
10. CONTROLS AND PROCEDURES         42
10.1. DISCLOSURE CONTROLS AND PROCEDURES         42
10.2. INTERNAL CONTROLS OVER FINANCIAL REPORTING         42
10.3. LIMITATIONS OF CONTROLS AND PROCEDURES         42
11. RESPONSIBILITY STATEMENTS         43
UNAUDITED INTERIM CONDENSED FINANCIAL STATEMENTS  
INDEPENDENT REVIEW REPORT TO ENDEAVOUR MINING PLC         45
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME         47
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS         48
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION         50
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY         51
NOTES TO THE UNAUDITED INTERIM CONDENSED FINANCIAL STATEMENTS         52

This Management Report should be read in conjunction with Endeavour Mining plc’s (“Endeavour ”, the “Company”, or the “Group”) condensed interim consolidated financial statements for the three and six months ended 30 June 2021 which has been prepared in accordance with UK adopted International Accounting Standard 34-Interim Financial Reporting using accounting policies consistent with International Financial Reporting Standards (“IFRS”) or (“GAAP”) and are included in section 2.1 of the unaudited interim condensed financial statements for the three and six months ended 30 June 2021, as well as the audited consolidated financial statements for the years ended 31 December 2020 and 2019 and notes thereto which has been prepared in accordance with IFRS. This Management Report is prepared as an equivalence to the Company’s Management Discussions & Analysis (“MD&A”) which is the Canadian filing requirement in accordance with National Instrument 51-102, Continuous Disclosure Obligations (“NI 51-102”), and includes all of the disclosures as required by NI 51-102.

This Management Report contains “forward-looking statements” that are subject to risk factors set out in a cautionary note contained herein. The reader is cautioned not to place undue reliance on forward-looking statements. All figures are in United States Dollars, unless otherwise indicated. Tabular amounts are in thousands of United States Dollars, except per share amounts and where otherwise indicated. This Management Report is prepared as of 3 August 2021. Additional information relating to the Company is available, including the Company’s prospectus (available on the Company’s website at www.endeavourmining.com) and the Company’s Annual Information Form (available on SEDAR at www.sedar.com).

1. BUSINESS OVERVIEW

1.1.        OPERATIONS DESCRIPTION

Endeavour is a multi-asset gold producer focused on West Africa and dual-listed on the Toronto Stock Exchange (“TSX”) and the London Stock Exchange (“LSE”) under the symbol EDV on both exchanges. The Company’s assets include five mines (Houndé, Mana, Boungou, Wahgnion and Karma) in Burkina Faso, the Ity mine in Côte d’Ivoire, the Sabodala-Massawa mine in Senegal, six development projects (Fetekro, Kalana, Bantou, Nabanga, Golden Hill and Afema) and a strong portfolio of exploration assets on the highly prospective Birimian Greenstone Belt across Burkina Faso, Côte d’Ivoire, Mali, Senegal, and Guinea. On 10 February 2021, Endeavour completed the acquisition of Teranga Gold Corporation (“Teranga”), a TSX-listed gold company which owned the Sabodala-Massawa and Wahgnion mines, as well as certain development and exploration assets. On 1 March 2021, the Company completed the disposition of its Agbaou mine in Côte d’Ivoire.

As a leading global gold producer and the largest in West Africa, Endeavour is committed to principles of responsible mining and delivering sustainable value to its employees, stakeholders, and the communities where it operates.

2. HIGHLIGHTS FOR THE THREE AND SIX MONTHS ENDED 30 JUNE 2021

Table 16: Consolidated Highlights

    THREE MONTHS ENDED SIX MONTHS ENDED
($’000s) Unit 30 June
2021
30 June
2020
30 June
2021
30 June
2020
Operating data from continuing operations          
Gold produced oz 408,992 124,561 743,254    268,994   
Gold sold oz 420,761 124,761 784,279    271,892   
Realised gold price1 $/oz 1,791 1,680 1,771    1,603   
All-in sustaining costs (AISC) per ounce sold 2 $/oz 853 938 855    909   
Cash flow data from continuing operations          
Operating cash flows before working capital $ 285,650 74,909 549,068    170,238   
Operating cash flows before working capital per share2 $/share 1.13 0.67 2.39    1.54   
Operating cash flows $ 300,475 53,497 507,218    153,396   
Operating cash flows per share2 $/share 1.19 0.48 2.21    1.38   
Profit and loss data from continuing operations          
Revenue1 $ 753,427 209,582 1,389,219    435,902   
Earnings from mine operations $ 272,976 75,584 479,590    147,763   
Net comprehensive earnings/(loss) attributable to shareholders $ 126,779 (38,488) 213,443    (21,817)  
Basic earnings/(loss) per share attributable to shareholders $/share 0.50 (0.35) 0.93    (0.20)  
EBITDA2 $ 363,322 22,625 696,253    124,451   
Adjusted EBITDA2 $ 399,755 99,262 706,197    206,182   
Adjusted net earnings attributable to shareholders2 $ 183,147 49,217 276,321    73,666   
Adjusted net earnings per share attributable to shareholders2 $/share 0.73 0.44 1.20    0.66   
Balance Sheet Data          
Cash $ 832,877 357,343 832,877    357,343   
Net Debt/(Cash)2 $ 77,123 472,654 77,123    472,654   
Net Debt/(Cash)/ Adjusted EBITDA (LTM) ratio2 : 0.07 1.00 0.07    1.00   

1 Revenue and ealized gold price are inclusive of the Sabodala-Massawa and Karma streams.
2 This is a non-GAAP measure. Refer to the non-GAAP measure section of this Management Report.

3. ENVIRONMENT, SOCIAL AND GOVERNANCE

Endeavour is committed to being a responsible gold miner, creating long-term value and sharing the benefits of its operations among all its stakeholders, including employees, host communities and shareholders. As the largest gold miner in West Africa and a trusted partner, Endeavour’s operations have the potential to provide a significant positive impact on the economies and social development of its local communities and host countries, while inimizing their impact on the environment.

Environment, social and governance (“ESG”) policies, systems and practices are embedded throughout the business and the Company reports annually on its ESG performance via its Sustainability Report. A dedicated sustainability governance structure has been established with an Environment, Sustainability and Governance Committee at board level, which the management of the ESG Committee reports into.

The Responsible Gold Mining Principles (“RGMPs”)

The RGMPs were launched by the World Gold Council, the industry body responsible for stimulating and sustaining demand for gold, to reflect the commitment of the world’s leading gold producers to responsible mining. The RGMPs provide a comprehensive ESG reporting framework that sets out clear expectations as to what constitutes responsible gold mining to help provide confidence to investors, supply chain participants and ultimately, consumers.

The RGMPs consist of ten umbrella principles and fifty-one detailed principles that cover key ESG themes. Member companies have three years to comply with the RGMPs and are required to obtain external assurance on their conformance to the RGMPs.

During 2020, Endeavour received external assurance on its first RGMP, 1.7 Accountabilities and Reporting and continued to progress on the implementation of the other RGMPs, including commissioning an independent external readiness assessment to confirm Endeavour’s internal gap assessment (conducted in 2019) and to provide additional recommendations in preparation for external assurance. For the year ended 31 December 2020, Endeavour received external assurance on seven RGMPs, the details of which are included in the Company’s 2020 Sustainability Report.

Responding to Climate Change

Being responsible stewards of the environment is critical to the Group’s long-term success. The Group has been reporting on its Scope 1 and Scope 2 greenhouse gas emissions since 2017 and Scope 3 emissions since 2019.

In Q2-21, Endeavour launched an augmented ESG strategy to reflect Company’s increased size. Central to the strategy is protecting the environment, with a core focus on tackling climate change, water stewardship, conserving biodiversity as well as plastic waste, a material issue in its host countries.

As part of Endeavour’s journey to net zero by 2050, the Company is working on its roadmap to reduce its greenhouse gas emissions intensity by 30% by 2030. Among the eight levers identified to reduce emissions, the Company has identified that switching to renewable power has the most potential. Solar power is expected to form a core part of the Group’s energy mix going forward, starting with the solar power plant project at the Houndé mine.

To support this commitment, 25% of the 2021 long-term executive compensation award (vesting in 2023) is tied to the successful implementation of a carbon reduction strategy and the commissioning of at least one significant renewable energy power plant.

Sustainability Update

During Q2-2021, Endeavour published its 2020 Sustainability Report. This Report marks a new milestone in the Company’s disclosure with the continued enhancement of transparency and the adoption of standards set by the Task Force on Climate-related Financial Disclosures (“TCFD”) and the Sustainability Accounting Standards Board (“SASB”). In addition, external assurance was obtained for the first time on key ESG indicators.

To increase transparency on local procurement, Endeavour has also adopted the Local Procurement Reporting Mechanism (“LPRM”), a framework created by Mining Shared Value to support transparency within the supply chain and standardize information on mine site procurement.

Endeavour’s 2020 sustainability highlights include:

  • 95% of the Group’s workforce is from host countries and 66% of senior management is from West Africa
  • 74% of total procurement, amounting to approximately $622 million, spent on in-country suppliers, supporting over 2,000 national and local businesses
  • Distribution of $894 million in economic value to host countries, including $262 million in taxes and royalties
  • Invested $24 million, equivalent to $27 per ounce of gold produced, in local communities and host countries, including $6 million to support the fight against COVID-19
  • Successful decrease in malaria cases by 19% and the Group’s malaria incidence rate by 38%
  • Fourth consecutive year of no significant environmental incidents, since annual sustainability reporting began
  • Greenhouse gas emission intensity (CO2-equivalent per oz gold produced) reduced by 13% compared to 2018
  • Significantly improved CDP Climate Change score from D- to C and achieved a C for Water Security performance

Launch of an augmented ESG Strategy

During the quarter, Endeavour announced an updated ESG strategy to reflect its increased size and scale. Endeavour’s ESG strategy is centered around two key pillars: investing in host countries and protecting the environment (as detailed above). These two pillars are underpinned by a strong governance framework and linked to clear, measurable ESG-related executive compensation targets (as outlined in the 2021 Management Information Circular).

The Company has also created the Endeavour Foundation, which will be its primary vehicle to implement its social investments and sustainability projects at the regional and national levels. The Endeavour Foundation’s focus areas are health, particularly malaria, education, access to water and energy, and economic development. The Endeavour Foundation will supplement the efforts being undertaken by ECODEV, an economic development fund established by Endeavour to support local economic growth by promoting and investing in the creation of long-term, sustainable, small and medium enterprises.

3.1.    HEALTH AND SAFETY

Endeavour puts the highest priority on safe work practices and systems. The Company’s ultimate aim is to achieve “zero harm” performance. The following table shows the safety statistics for the trailing twelve months ended 30 June 2021. The Group’s lost time injury frequency rate (“LTIFR”) continues to be well below the industry benchmark.

Table 17: LTIFR2 and TRIFR3 Statistics for the Trailing Twelve Months ended 30 June 2021 1

        Incident Category
  Fatality Lost Time Injury Total People Hours LTIFR2 TRIFR3
Boungou1 —      2,679,945 0.37    1.87
Houndé —    —    4,749,512 —    1.26
Ity —      5,975,853 0.17    1.51 
Karma —    —    3,195,348 —    — 
Mana1 —    —    5,008,755 —    3.39
Non Operations4 —      4,024,433 0.25    0.50 
Sabodala-Massawa1 —      2,532,725 0.39    2.76
Wahgnion1 —      2,180,042 0.46    2.75
Total —      30,346,613    0.16    1.60 

 

1Data relating to the acquired SEMAFO and Teranga entities have been included from their acquisition date.
2LTIFR = Number of LTIs in the Period x 1,000,000 / Total people hours worked for the period.
3Total Recordable Injury Frequency Rate (“TRIFR”) = Number of (LTI+Fatalities+Restricted Work Injury+Medical Treated Injury+First Aid Injury) in the period x 1,000,000 / Total people hours worked for the period.
4 Non Operations” includes Corporate, Kalana and Exploration.

3.2.    COVID-19 RESPONSE

Since the outbreak of the global COVID-19 pandemic, Endeavour has focused on the well-being of its employees, contractors and local communities, while ensuring business continuity. In addition, host governments in Côte d’Ivoire, Burkina Faso, Senegal and Mali have taken strict and pro-active measures to minimise overall exposure in their countries.

Protecting the well-being of employees, contractors, and local communities

  • Endeavour has implemented a range of preventative measures at all its sites, including social distancing, health screening, augmented hygiene and restricted access to sites. During Q2-21, this has also included vaccination awareness campaigns across sites and offices.
  • Endeavour has donated key medical equipment and supplies to regional, community and on-site medical centres across all four countries of its projects and operations and continues to monitor the needs of its communities.
  • A range of community programmes have been implemented during the pandemic, including micro-credit programmes, which have helped to support people in host communities whose livelihoods were impacted by the pandemic, and e-learning programmes in Burkina Faso to facilitate access to distance learning for students.

Business continuity response plan

  • In early March 2020, Endeavour put in place a business continuity plan to mitigate the risks and potential impact of the global COVID-19 pandemic, which has three levels of response:
    • Level 1, which the Group is currently operating under, involves a range of preventative measures including temperature checks, restricted access to sites, social distancing, increased hygiene standards and mandatory quarantine periods for employees arriving in-country, while otherwise continuing operations as normal.
    • Level 2 is designed to be initiated should COVID-19 become more prevalent in the countries in which the Group operates and involves comprehensive restrictions on movement into and out of the mines. Under these circumstances, Endeavour’s mines would be isolated, but mining operations and the shipment of gold would continue.
    • Level 3 involves the full or partial suspension of mining and processing operations.
  • The Company’s cloud-based strategy ensures that employees who need to work from home are able to access all the relevant applications, systems and collaboration tools needed to perform their duties. In addition, the Company’s cyber security response has been updated and is constantly tracked in light of the increased cyber security risk generally observed during the pandemic.

4.  OPERATIONS REVIEW

The following tables summarises operating results for the three and six months ended 30 June 2021 and 30 June 2020.

4.1.    Operational Review Summary

  • Q2-2021 consolidated production from continuing operations amounted to 408,992 ounces, an increase of 284,431 ounces or 228% compared to Q2-2020. Group production increased due to higher production at Houndé, Ity and Karma as well as the addition of the Mana and Boungou mines which were acquired on 1 July 2020 and the Wahgnion and Sabodala-Massawa mines which were acquired on 10 February 2021. Group AISC from continuing operations decreased by 9% or $85 per ounce primarily due to the inclusion of lower cost Wahgnion and Sabodala-Massawa mines during the quarter as well as lower cost at Houndé due to lower sustaining capital expenditure.
  • H1-2021 consolidated production from continuing operations increased by 474,260 ounces or 176% which was more than double that of H1-2020, as a result of the addition of four new mines (Mana, Boungou, Wahgnion and Sabodala-Massawa) since the end of Q2-2020. AISC for all operations decreased by $56 per ounce or 6% to $860 per ounce due to the inclusion of lower cost Wahgnion and Sabodala-Massawa mines during the quarter as well as lower cost at Houndé due to lower sustaining capital.

Table 18: Group Production

  THREE MONTHS ENDED SIX MONTHS ENDED
  30 June 2021 30 June 2020 30 June 2021 30 June 2020
(All amounts in koz, on a 100% basis)
Boungou 39    —    99    —   
Houndé 80    57    146    113   
Ity 79    47    150    108   
Karma 25    20    47    48   
Mana 49    —    102    —   
Sabodala-Massawa1 96    —    135    —   
Wahgnion1 41    —    66    —   
PRODUCTION FROM CONTINUING OPERATIONS 409    125    743    269   
Agbaou2 —    24    13    52   
GROUP PRODUCTION 409    149    756    321   

 

1Included for the post acquisition period commencing 10 February, 2021.
2Divested on 1 March, 2021.

Table 19: Group All-In Sustaining Costs1

(All amounts in US$/oz) THREE MONTHS ENDED SIX MONTHS ENDED  
30 June 2021 30 June 2020 30 June 2021 30 June 2020  
 
Boungou 950    —    793    —     
Corporate  G&A 25    34    28    32     
Houndé 741    965    787    1,020     
Ity 806    789    796    707     
Karma 1,070    951    1,120    889     
Mana 1,016    —    982    —     
Sabodala-Massawa2 637    —    675    —     
Wahgnion2 980    —    903    —     
AISC1 FROM CONTINUING OPERATIONS 853    938    855    909     
Agbaou3 —    955    1,131    953     
GROUP AISC1 853    941    860    916     

1This is a non-GAAP measure.
2Included for the post acquisition period commencing 10 February 2021.
3Divested on 1 March 2021.

4.2    Boungou Gold Mine, Burkina Faso

Table 20: Boungou Key Performance Indicators4

    THREE MONTHS ENDED SIX MONTHS ENDED
  Unit 30 June 2021 30 June 2020 30 June 2021 30 June 2020
Operating Data          
Tonnes ore mined kt 350 596
Tonnes of waste mined kt 7,996 14,422
Tonnes of ore milled kt 336 651
Average gold grade milled g/t 3.84 4.65
Recovery rate % 95 95
Gold produced oz 38,802 98,549
Gold sold oz 37,974 95,833
Realised gold price $/oz 1,801 1,783
Financial Data ($'000)          
Revenue $ 68,375    —    170,851    —   
Operating expenses $ (23,580)   —    (56,924)   —   
Royalties $ (4,147)   —    (10,341)   —   
Non-cash operating expenses2 $ 624    —    4,329    —   
Total Cash Cost1 $ (27,103)   —    (62,936)   —   
Sustaining capital1 $ (8,955)   —    (13,065)   —   
Total All-in Sustaining Costs1 $ (36,058)   —    (76,001)   —   
Non-sustaining capital1 $ (3,932)   —    (8,425)   —   
Total All-in Costs1 $ (39,990)   —    (84,426)   —   
All-In Margin1, 3 $ 28,385    —    86,425    —   
Cash cost per ounce sold1 $/oz 714    —    657    —   
Mine All-In Sustaining Costs per ounce sold1 $/oz 950    —    793    —   

1 Non-GAAP measure. Refer to the non-GAAP Measures section for further details.

2 Non-cash operating expenses relates to the reversal in the period of the fair value adjustment of inventory on hand at the acquisition date.
3 All-In Margin is calculated as revenue less all-in costs for the period.
4 Analysis of operations is only for the period after its acquisition by Endeavour on 1 July 2020.

Q2-2021 Insights

  • Production of 38,802 ounces on account of ore milled from lower grade areas of the West pit offsetting higher plant throughput which resulted from good fragmentation of mined materials as well as good recovery rates.
    • Tonnes mined in the quarter focused on a combination of pre-stripping of the top oxide benches in the West Pit Phase 3 and fresh waste rock in West Pit Phase 2 and with pre-stripping activity in the East Pit, following completion of mobilisation of the mining contractor fleet. Tonnes of ore mined was mainly sourced from the West pit.
    • Tonnes milled benefited from high throughput associated with good fragmentation of material mined as well as operational improvements made to optimise feed to the SAG mill, pebble crusher and vertical tower mill.
    • Processed grade was lower as mill feed was mainly sourced from lower grade areas of the West Pit per the mining sequence.
  • AISC was $950 per ounce due to planned sustaining capital expenditures, which were partially offset by lower unit mining costs associated with the low strip ratio and higher portion of oxide ore mined, and a lower unit processing cost due to higher throughput.
  • Sustaining capital expenditure was $9.0 million and related predominantly to waste capitalisation at the West pit and the commencement of the TSF wall raise #3.
  • Non-sustaining capital expenditure was $3.9 million and related to pre-stripping at the East pit.


H1-2021 Insights

  • Strong production during Q1-2021 offset the decrease in production during Q2-2021 as a result of lower average processed grade despite higher plant throughput.
    • Total tonnes mined was high, which is attributable to ramp up of mining activities following the commissioning of additional mining equipment during Q1-2021 and the benefit of mining on the top benches as well as lower strip ratio during Q2-2021. Pre-stripping activities at the East pit which started in Q1-2021 continued during Q2-2021. Tonnes of ore mined was mainly sourced from the West pit during H1-2021.
    • Tonnes milled increased through the period as a result of the higher mill utilisation due to better mining fragmentation, as well as the benefit of operational improvements to optimise the feed to the SAG mill, pebble crusher and vertical tower mill.
    • Average processed grade decreased during the period as the mill feed was increasingly sourced from the lower grade areas of the West Pit towards the end of the period, in accordance with the mining sequence, following completion of mining of the higher grade areas which required minimal waste stripping during the restart of mining activities in Q4-2020 and Q1-2021.
  • AISC per ounce increased during Q2-2021 compared to Q1-2021 due to an increase in sustaining waste capital. Unit mining and unit processing cost decreased in Q2-2021 compared to Q1-2021, benefiting from increased tonnes mined and processed.
  • Sustaining capital expenditures of $13.1 million during H1-2021 related to waste capitalisation at West pit and the commencement of the TSF wall raise #3.
  • Non-sustaining capital expenditure of $8.4 million related to pre-stripping at the East pit.

2021 Outlook

  • Boungou is well positioned to meet its FY-2021 production guidance of 180 - 200koz, while AISC are expected to continue to trend above the guided $690 - 740 per ounce range as a result of higher fuel prices and increased security costs.
  • Plant feed is expected to continue to be sourced from the West Pit with waste stripping activities continuing at the East Pit throughout the year. Mill throughput is expected to remain broadly consistent with H1-2021 performance, along with average processed grades, while recovery rates are expected to slightly decline due to the ore characteristics.
  • The sustaining capital spend outlook for FY-2021 remains unchanged compared to the initial guidance of $19.0 million, of which $13.1 million has been incurred in H1-2021. The non-sustaining capital spend outlook for FY-2021 also remains unchanged compared to the initial guidance of $22.0 million, of which $8.4 million has been incurred in H1-2021.

2021 Exploration Programme

  • An exploration programme of up to $7.0 million has been planned for 2021, of which $4.6 million was spent in H1-2021 consisting of 24,307 meters of drilling across 245 drillholes. The exploration efforts were focused on delineating near mine targets and the area between the East and West pit.
  • Drilling conducted in H1-2021 at Natougou NW identified a zone of higher-grade mineralisation trending north-northwest that extends for over 700 meters and remains open to the north. In H2-2021 drilling will focus on delineating this trend. Drilling at Natougou SE, Natougou SW and West Flanc targeted the extension of existing mineralised trends and the evaluation of inferred resources.
  • At Boungou NW, H1-2021 drilling evaluated the continuation of the Boungou Shear Zone mineralisation. Initial results are promising and a complete review of all drill results in H2-2021 will guide follow-up drilling in 2022.

4.3    Houndé Gold Mine, Burkina Faso

Table 21: Houndé Key Performance Indicators

    THREE MONTHS ENDED SIX MONTHS ENDED
  Unit 30 June
2021
30 June
2020
30 June
2021
30 June
2020
Operating Data          
Tonnes ore mined kt 1,399 1,072 3,024 1,972
Tonnes of waste mined kt 10,319 10,437 22,630 20,848
Tonnes milled kt 1,108 1,035 2,254 2,101
Average gold grade milled g/t 2.47 1.91 2.17 1.83
Recovery rate % 92    92    92    91   
Gold produced oz 79,632 57,444 145,686 113,304
Gold sold oz 76,827 57,431 143,858 114,102
Realised gold price $/oz 1,790 1,745 1,780 1,657
Financial Data ($'000)          
Revenue $ 137,549    100,190    256,070    189,026   
Operating expenses $ (41,556)   (36,304)   (82,051)   (78,407)  
Royalties $ (6,803)   (8,025)   (17,815)   (15,130)  
Total Cash Cost1 $ (48,359)   (44,329)   (99,866)   (93,537)  
Sustaining capital1 $ (8,602)   (11,117)   (13,304)   (22,891)  
Total All-In Sustaining Costs1 $ (56,961)   (55,446)   (113,170)   (116,428)  
Non-sustaining capital1 $ (2,985)   (5,750)   (9,681)   (7,565)  
Total All-in Costs1 $ (59,946)   (61,196)   (122,851)   (123,993)  
All-In Margin1, 2 $ 77,603    38,994    133,219    65,033   
Cash cost per ounce sold1 $/oz 629    772    694    820   
Mine All-In Sustaining Costs per ounce sold1 $/oz 741    965    787    1,020   

1 Non-GAAP measure. Refer to the non-GAAP Measures section for further details.
2 All-In Margin is calculated as revenue less all-in costs for the period.

Q2-2021 vs Q2-2020 insights

  • Production increased significantly relative to Q2-2020 due to higher plant throughput from the addition of high grade oxide materials sourced from the Kari Pump area while recovery rate remained consistent with prior periods.
    • Tonnes of ore mined increased due to an increase in the proportion of oxide ore tonnes mined and a lower strip ratio. Mining was focused on high grade oxide ore at Kari Pump and supplemented by fresh ore from the Vindaloo Center and Bouéré pits. Mining ramped up at Kari Pump following pre-stripping in Q2-2020 and the planned waste stripping in Q1-2021.
    • Tonnes milled increased due to the increased milling rate that resulted from higher proportion of oxide ore in the blend.
    • Average gold grade milled increased due to the benefit of higher grade ore from the Kari-Pump and Bouéré pits, supplemented by lower amounts of lower grade fresh ore from Vindaloo Center.
  • AISC decreased due to lower sustaining capital which was offset by higher unit mining cost as a result of more tonnes sourced from the Kari Pump area which has a longer hauling distance. Processing unit costs remained consistent.
  • Sustaining capital of $8.6 million is related to waste capitalisation at the Vindaloo Main pit.
  • Non-sustaining capital of $3.0 million is related to the costs associated with the development of the Kari West pit.

H1-2021 vs H1-2020 Insights

  • Production increased due to increased throughput and higher average processed grades, mainly as a result of the ramp-up of the Kari Pump deposit.
    • Tonnes of ore mined increased mainly due to the ramp up at the Kari Pump pit, which allowed further optionality in the mine plan compared to prior periods when Kari Pump was at the pre-stripping stage.
    • Tonnes milled increased as mill throughput improved due to the higher proportion of oxide ore from the Kari Pump pit, offsetting the higher volumes of fresh ore from the Vindaloo Main and Bouéré pits.
    • Average gold grade milled increased due to the addition of the high grade Kari Pump ore, which was supplemented by ore from the Vindaloo Main and the Bouéré pits.
  • AISC decreased due to lower unit mining costs as a result of a lower strip ratio as well as the decrease in sustaining capital, which was slightly offset by higher royalties associated with the higher realised gold price, higher unit processing cost associated with scheduled maintenance and higher unit G&A costs as a result of increase in patent taxes and insurance with the commencement of mining Kari pump area.

2021 Outlook

  • H1-2021 performance was stronger than scheduled due to good mining productivities achieved during the Kari Pump pre-stripping enabling, increased access to high grade oxide ore. As such, Houndé is on track to meet the top half of its FY-2021 production guidance of 240—260koz, with AISC expected to achieve the guided $855—905 per ounce range.
  • Mining activities in H2-2021 will continue to focus on Kari Pump, supplemented by contributions from Bouéré and Vindaloo Centre pits. Mining is expected to focus on lower grade areas during the wet season and as a greater focus is placed on waste stripping activities, primarily related to Vindaloo Main pit and Kari West where the pre-strip is expected to be completed in late 2021. Throughput is expected to slightly decline in H2-2021, while recovery rates are expected to remain similar to H1-2021 and processed grade is expected to be lower following the higher grades brought forward in Q2-2021.
  • The sustaining capital spend outlook for FY-2021 remains unchanged compared to the initial guidance of $39.0 million, of which $13.3 million has been incurred in H1-2021. The non-sustaining capital spend outlook for FY-2021 also remains unchanged compared to the initial guidance of $13.0 million, of which $9.7 million has been incurred in H1-2021.

2021 Exploration Programme

  • An exploration programme of up to $7.0 million has been planned for 2021 of which $6.8 million was spent in H1-2021 consisting of 68,871 meters of drilling across 630 drillholes. The exploration efforts were focused on Vindaloo South, Mambo and the intersection between Kari Gap and Kari Center.
  • Drilling has confirmed that the Mambo target, located 12km from the Houndé plant, has the potential to be a significant discovery with mineralisation that extends over 800 meters in length and 200 meters wide and remains open to the southwest, northeast, and at depth. During H2-2021, step out drilling will target lateral extensions of Mambo to the southwest and northeast. A maiden resource at Mambo is expected to be published in H2-2021.
  • During H1-2021 exploration in the Kari Area and at Vindaloo South was focussed on delineating mineralised extensions which will be pursued in H2-2021.

4.4.    Ity Gold Mine, Côte d’Ivoire

Table 22: Ity CIL Key Performance Indicators

    THREE MONTHS ENDED SIX MONTHS ENDED
  Unit 30 June
2021
30 June
2020
30 June
2021
30 June
2020
Operating Data          
Tonnes ore mined kt 1,877 1,650 3,982 3,559
Tonnes of waste mined kt 4,057 3,725 8,768 7,042
Tonnes milled kt 1,544 1,180 3,094 2,590
Average gold grade milled g/t 1.96 1.59 1.86 1.61
Recovery rate % 81    77    80    81   
Gold produced oz 79,487 46,790 150,369 107,795
Gold sold oz 83,377 46,146 157,860 109,660
Realised gold price $/oz 1,803    1,721    1,790    1,643   
Financial Data ($'000)          
Revenue $ 150,337    79,419    282,493    180,142   
Operating expenses $ (51,756)   (29,702)   (97,840)   (64,932)  
Royalties $ (8,311)   (4,453)   (15,499)   (9,216)  
Total Cash Cost1 $ (60,067)   (34,155)   (113,339)   (74,148)  
Sustaining capital1 $ (7,102)   (2,253)   (12,340)   (3,376)  
Total All-in Sustaining Costs1 $ (67,169)   (36,408)   (125,679)   (77,524)  
Non-sustaining capital1 $ (8,376)   (10,746)   (20,423)   (21,693)  
Total All-in Costs1 $ (75,545)   (47,154)   (146,102)   (99,217)  
All-In Margin1, 2 $ 74,792    32,265    136,391    80,925   
Cash cost per ounce sold1 $/oz 720    740    718    676   
Mine All-In Sustaining Costs per ounce sold1 $/oz 806    789    796    707   

1 Non-GAAP measure. Refer to the non-GAAP Measures section for further details.
2 All-In Margin is calculated as revenue less all-in costs for the period.

Q2-2021 vs Q2-2020 insights

  • Production was ahead of expectation as higher-grade ore was brought forward in the mine plan and there was also higher throughput, higher processed average grade, as well as higher plant recovery rate while the prior quarter production was lower due to prioritising waste extraction.
    • Tonnes ore mined increased due to higher mining fleet availability and lower strip ratio. Ore extraction increased at Ity pit which benefited from lower strip ratio compared to Q2-2020 due to the planned cutback. In addition, mining activities commenced at the Walter pit and the Flotouo low grade dump providing greater operational flexibility.
    • Tonnes milled increased and performed above nameplate due to increased plant operating time as well as a higher proportion of oxide materials from the Daapleu, Bakatouo, Heap Dump, Flotouo dump and Colline Sud pits, with a slight increase in fresh blend sourced from Daapleu, Bakatouo and Ity pits.
    • Processed grade increased due to the benefit of the higher grade ore from the Bakatouo pit, which was supplemented with ore from the Daapleu and Walter pits.
    • Despite the higher proportion of transitional and fresh ore processed in Q2-2021, recovery rates increased, as higher quality material from Flotouo was treated preferentially displacing the more viscous Verse Ouest material.
  • AISC per ounce increased due to higher unit mining costs as a result of longer hauling distance for ore mined from the newly commissioned Flotouo and Walter pits as well as the transition to contractor mining. In addition, unit processing costs increased due to the increase in the proportion of transitional and fresh material and the higher reagent consumption due to an increase in the proportion of Daapleu ore processed. Higher power costs impacted AISC by approximately $20/oz due to increased utilisation of generators as a result of temporarily reduced grid power availability. The cost increase was also impacted by higher sustaining capital expenditure.
  • Sustaining capital expenditure of $7.1 million related primarily to waste stripping at the Ity, Walter and Colline Sud pit.
  • Non-sustaining capital expenditure of $8.4 million mainly related to the construction of the Stage 3 raise of the Tailings Storage Facility (“TSF”), the Le Plaque haul road construction, and the Cavally river diversion.
  • During Q2-2021, Ity transitioned from owner mining to contract mining with Societe de Forage et des Travaux Publics (“SFTP”), a local contractor who are already performing contract mining services at our Karma and Boungou mines. As a part of the transition, the mining fleet at Ity were sold to SFTP for approximately $24.2 million.

H1-2021 vs H1-2020 Insights

  • Production increased due to the higher throughput and higher processed grades.
    • Despite the slightly higher strip ratio in H1-2021, tonnes of ore mined increased due to higher mining fleet availability and commencement of mining at the Walter, Colline Sud and Flotouo pits, which in turn provided greater operational flexibility.
    • Tonnes milled increased due to increased mill utilisation and the supplemental processing of oxide ore through the surge bin.
    • Average gold grade milled increased in H1-2021 due to the higher grade ore sourced from the Bakatouo and Daapleu pits, whereas in H1-2020 a higher proportion of the mill feed was supplemented by lower grade oxide stockpiles, as mining was focused on waste extraction.
    • The higher proportion of fresh ore sourced from Daapleu in H1-2021 resulted in a slight decrease in recovery rates.
  • AISC per ounce increased due to higher mining and processing unit costs and increased sustaining capital as a result of higher capitalised waste. The higher unit mining costs were a result of the longer haul distance for ore mined from the newly commissioned Walter and Flotouo pits, while the higher processing costs are due to a higher proportion of fresh ore being processed.

2021 Outlook

  • H1-2021 performance was stronger than scheduled due to the benefit of a good processing performance with a combination of higher throughput, grade, and recovery. As such, Ity is on track to meet the top half of its FY-2021 production guidance of 230—250koz, with AISC expected to achieve the top-end of the guided $800—850 per ounce range.
  • Waste extraction activities are expected to ramp up at the Ity pit in H2-2021 as stripping which was deferred from H1-2021 is carried out. As a result, the proportion of ore mined from Bakatouo, Daapleu and Colline Sud is expected to decrease in H2-2021. Throughput is expected to be slightly lower in H2-2021 compared to H1-2021 due to the onset of the wet season, while the average processed grade is expected to be lower due to a higher proportion of feed from historical lower grade stockpiles.
  • The sustaining capital spend outlook for FY-2021 remains unchanged compared to the initial guidance of $28.0 million, of which $12.3 million has been incurred in H1-2021. Non-sustaining capital spend for FY-2021 is expected to amount to approximately $40.0 million, of which $20.4 million has been incurred in H1-2021. This increase compared to the initial H1-2021 guidance of $27.0 million is due to initiation of new optimization initiatives, primarily associated with reducing reagent consumption and enhancing recoveries.

2021 Exploration Programme

  • An exploration programme of $9.0 million has been planned for 2021 of which $6.2 million was spent in H1-2021 consisting of 45,144 meters of drilling across 441 drillholes. The exploration efforts were focused on Le Plaque South (Delta Extension), West Flotouo (Verse Ouest), Daapleu Deep, Yopleu-Legaleu and the junction between Bakatouo and Walter.
  • Drilling on the West Flotouo target, which was informed following a re-interpretation of structural and geological data, led to the discovery of a high grade mineralised lenses immediately below the former Flotouo dump, located in proximity to the plant. A maiden resource is expected to be published in late 2021.
  • Drilling in the Le Plaque area focussed on extending mineralisation at Le Plaque South and Yopleu-Legaleu. An updated Le Plaque resource is expected to be published in late 2021.
  • Drilling conducted at Daapleu confirmed that mineralisation extends at least 300 meters downdip of the current pit design and the target will be delineated further in H2-2021.
  • Drilling at the junction between the Bakatouo and Walter deposits confirmed mineralisation is continuous and that it remains open at depth, and will therefore be further explored in H2-2021.

4.5.    Karma Gold Mine, Burkina Faso

Table 23: Karma Key Performance Indicators

    THREE MONTHS ENDED SIX MONTHS ENDED
  Unit 30 June
2021
30 June
2020
30 June
2021
30 June
2020
Operating Data          
Tonnes ore mined kt 1,253 1,288 2,496 2,517
Tonnes of waste mined kt 4,959 3,513 8,862 7,237
Tonnes of ore stacked kt 1,267 1,238 2,647 2,352
Average gold grade stacked g/t 0.91 0.81 0.81 0.91
Recovery rate % 68    80    67    81   
Gold produced oz 25,057 20,327 46,630 47,895
Gold sold oz 25,615 21,184 48,011 48,130
Realised gold price1 $/oz 1,729 1,415 1,647 1,387
Financial Data ($'000)          
Revenue1 $ 44,283    29,973    79,083    66,735   
Operating expenses $ (23,285)   (15,296)   (46,152)   (34,055)  
Royalties $ (3,853)   (2,828)   (7,158)   (6,079)  
Total Cash Cost2 $ (27,138)   (18,124)   (53,310)   (40,134)  
Sustaining capital2 $ (258)   (2,028)   (482)   (2,667)  
Total All-In Sustaining Costs2 $ (27,396)   (20,152)   (53,792)   (42,801)  
Non-sustaining capital2 $ (2,073)   (3,838)   (2,895)   (5,912)  
Total All-in Costs2 $ (29,469)   (23,990)   (56,687)   (48,713)  
All-In Margin2, 3 $ 14,814    5,983    22,396    18,022   
Cash cost per ounce sold2 $/oz 1,059    856    1,110    834   
Mine All-In Sustaining Costs per ounce sold2 $/oz 1,070    951    1,120    889   

1Revenue and realised gold price are inclusive of the Karma stream.
2Non-GAAP measure. Refer to the non-GAAP Measures section for further details.

3 All-In Margin is calculated as revenue less all-in costs for the period.

Q2-2021 vs Q2-2020 insights

  • Production increased due to the increased stacking rate and higher average grade stacked offset by lower recovery rates on account of higher tonnage of GG1 ore stacked.
    • Total ore tonnes mined decreased slightly due to the increase in strip ratio at GG1 as higher transitional ore tonnes were mined. Ore continued to be sourced from the GG1 and Kao North pits.
    • Ore tonnes stacked slightly increased as a higher proportion of coarse material from the GG1 pit was available, with stacker availability and utilisation remaining consistent. Ore tonnes from the GG1 and Kao North pit were mostly oxide with a blend of transitional materials. The proportion of transitional material increased with stacked tonnes being supplemented by stockpiles.
    • The stacked ore grade increased due to a higher average grade sourced from the North Kao pit while the average grade from the GG1 remained flat.
    • Recovery rate decreased due to the increased proportion of ore from the GG1 pit and an increased proportion of transitional ore, which has a lower associated recovery rate.
  • AISC per ounce increased due to increased mining strip ratio, with the completion of Kao North phase 3 and commencement of phase 4, lower recovery rate and higher royalties, which was partially offset by slightly lower mining and processing unit cost.
  • Sustaining capital expenditure was $0.3 million and related to mining pit dewatering boreholes and other site equipment upgrades.
  • Non-sustaining capital expenditure was $2.1 million, which was related to construction of new cells within the heap leach pad.

H1-2021 vs H1-2020 Insights

  • Production decreased despite the higher ore tonnes stacked due to lower grade material being stacked and lower recovery rates.
    • Ore tonnes mined decreased due to increased strip ratio and reduced mining at the Kao North pit which was partially offset by increased mining at the GG1 pit.
    • Ore tonnes stacked increased due to higher stacker utilisation which permitted stockpile to be processed to supplement the mill feed.
    • The average stacked grade decreased due to higher proportion of the low grade GG1 and low grade supplemental stockpile ore stacked in H1-2021 compared to H1-2020 where a higher proportion of the high grade Kao North ore was stacked.
    • Recovery rate decreased due to the increased GG1 ore and the transitional ore stacked, which has a lower associated recovery rate.
  • AISC per ounce increased due to higher strip ratio, higher royalties as well as lower recovery rates.
  • Sustaining capital expenditure was $0.5 million and related to mining pit dewatering boreholes and other site equipment upgrade.
  • Non-sustaining capital expenditure was $2.9 million and related to construction of new cells within the heap leach pad compared to non-sustaining costs in Q1-2020 related to the completion of the stacking system upgrades.

Outlook

  • Given its strong H1-2021 performance, Karma is well positioned to meet its FY-2021 production guidance of 80—90koz at an AISC of $1,220—$1,300 per ounce.
  • Mining activity is expected to focus on the GG1 pit for the remainder of the year. As a result of the increase in transitional material mined from the GG1 pit, processed grades and recoveries are expected to be lower in H2-2021, while ore stacked is expected to decrease in Q3-2021 due to the wet season, before returning to normal levels in Q4-2021.
  • The sustaining capital outlook at Karma is expected to be significantly lower than the $11.0 million guided as a result of the waste development being included as an operating cost for 2021. The non-sustaining capital spend outlook for FY-2021 remains unchanged compared to the initial guidance of $5.0 million, of which $2.9 million has been incurred in H1-2021.

2021 Exploration Programme

  • In H1-2021, exploration work was carried out as part of the advanced grade control drilling programme, with the aim of delineating near mine extensions and expediting their incorporation in the current mine plan. The focus was on Kao Main, Kao north, Rambo, GG1, GG2, Anomaly B and Kanongo, which will be pursued in H2-2021.

4.6.    Mana Gold Mine, Burkina Faso

Table 24: Mana Key Performance Indicators4

    THREE MONTHS ENDED SIX MONTHS ENDED
  Unit 30 June 2021 30 June 2020 30 June 2021 30 June 2020
Operating Data          
Tonnes ore mined - open pit kt 549 904
Tonnes of waste mined - open pit kt 6,638 14,816
Tonnes ore mined – underground kt 214 459
Tonnes of waste mined - underground kt 82 165
Tonnes of ore milled kt 670 1,275
Average gold grade milled g/t 2.49 2.68
Recovery rate % 92 91   
Gold produced oz 49,167 101,566
Gold sold oz 49,769 110,323
Realised gold price $/oz 1,804 1,789
Financial Data ($'000)          
Revenue $ 89,784    197,398   
Operating expenses $ (40,847)     (87,620)  
Royalties $ (4,867)   (13,037)    
Non-cash operating expenses2 $ 372      379   
Total Cash Cost1 $ (45,342)   (100,278)  
Sustaining capital1 $ (5,215)   (8,020)  
Total All-in Sustaining Costs1 $ (50,557)   (108,298)  
Non-sustaining capital1 $ (21,093)   (45,165)  
Total All-in Costs1 $ (71,650)   (153,463)  
All-In Margin1, 3 $ 18,134    43,935   
Cash cost per ounce sold1 $/oz 911    909   
Mine All-In Sustaining Costs per ounce sold1 $/oz 1,016    982   

1 Non-GAAP measure. Refer to the non-GAAP Measures section for further details.

2 Non-cash operating expenses relates to the reversal in the period of the fair value adjustment of inventory on hand at the acquisition date.
3 All-In Margin is calculated as revenue less all-in costs for the period.
4 Analysis of operations is only for the period after its acquisition by Endeavour on 1 July 2020.

Q2-2021 Insights

  • Production of 49,167 ounces is due to a higher plant throughput rate and utilisation, good recovery rates associated with ore milled from the Wona South pit and offset by lower average processed grades from the underground mine.
    • Open pit ore tonnes mined was higher following the planned waste development at the Wona South pit which provided access to a wider ore floor to be mined.
    • Total underground tonnes mined was lower due to reduced development ore meters advanced and fewer stope ore tonnes available for mining.
    • Tonnes milled increased due to an increase in mill availability and utilisation following the scheduled plant maintenance in Q1-2021 and higher plant throughput rate due to the softer ore characteristics in Wona South compared to Wona North.
    • The average processed grade decreased due to lower open pit grades mined from the Wona South Pit.
  • AISC was higher due to high open pit unit mining costs as a result of increased production drilling and blasting activities in the fresh ore areas of Wona South pit, as well as higher underground unit mining cost due to additional ground support installed. The higher costs were partially offset by lower processing unit costs due to improved power supply from newly installed generators.
  • Sustaining capital of $5.2 million is related to underground development to create new stoping levels.
  • Non-sustaining capital expenditure of $21.1 million was mainly related to open pit waste capitalisation at the Wona South Stage 3 pit and TSF raise.

H1-2021 Insights

  • Production in Q2-2021 decreased compared to Q1-2021 due to a reduction in the average processed grade which was slightly offset by the increase in plant throughput.
    • Total open pit tonnes of ore mined was higher in Q2-2021, as a result of the lower strip ratio, following the planned waste development at the Wona South pit in Q1-2021 and final benches of mining in the Wona North Stage 3 pit. In Q2-2021 ore was mainly sourced from Wona Main and Wona South Pits while mining at Wona North Stage 3 completed during Q1-2021.
    • Total underground ore tonnes mined in Q2-2021 decreased as underground mining focused on development and backfilling.
    • Tonnes milled increased in Q2-2021 due to an increase in mill utilisation and average throughput per hour due to the softer ore characteristics of Wona South pit which resulted in the higher plant throughput. The ore processed in both Q1-2021 and Q2-2021 was mainly fresh materials, sourced from both the open pit and underground mines.
    • The average processed grade was high due to higher processed grade sourced from Wona Main pit during Q1-2021 despite the lower average grade during Q2-2021.
  • AISC was higher but remains within guidance due to higher open pit unit mining costs in Q2-2021 compared to Q1-2021 as a result of higher production drilling and blasting activities in the fresh ore areas of Wona South pit, as well as higher underground unit mining costs as a result of increased stope activity costs.
  • Sustaining capital expenditures of $8.0 million are related to underground development, as well as heavy mobile equipment.
  • Non-sustaining capital of $45.2 million primarily related to open pit waste development, and a TSF raise.

Outlook

  • Given its strong H1-2021 performance driven by strong mill throughput and grades, Mana is well positioned to meet its FY-2021 production guidance of 170 - 190koz at an AISC of $975 - 1,050 per ounce.
  • In H2-2021, ore will continue to be sourced from the Siou underground mine while open pit mining activities at Siou are expected to wind down. Following optimization studies completed in Q2-2021, Wona will be pursued as an underground operation rather than being continued as an open pit operation and eliminate the need for a large pit cut-back. Underground development at Wona will therefore be expedited, with decline development expected to commence in Q3-2021. Mill throughput and grades are expected to be slightly lower in H2-2021, compared to H1-2021, while recovery rates are expected to remain similar.
  • The total sustaining and non-sustaining capital spend outlook for FY-2021 remains unchanged. As a result of the reduction in required stripping activities at Wona, following the decision to shift to underground mining, the FY-2021 sustaining capital outlook is expected to be significantly lower than the $27.0 million guided, of which $8.0 million has been incurred in H1-2021. Due to the reallocation of capital for the Wona underground development, the non-sustaining capital outlook for FY-2021 is expected to amount to slightly more the $62.0 million guided, of which $45.2 million has been incurred in H1-2021.

2021 Exploration Programme

  • An exploration programme of up to $8.0 million has been planned for 2021 of which $7.1 million was spent in H1-2021 consisting of 59,620 meters of drilling across 459 drillholes. The exploration efforts were focused on oxide open pit targets, such as Maoula, and on evaluating underground targets at Siou and Nyafe.
  • Drilling conducted at Maoula confirmed and extended mineralisation in the western and eastern lenses of the deposit. In H2-2021, exploration work will continue to focus on defining indicated resources and extending the mineralised trend to the southwest, where the deposit remains open. Some delineation drilling was also conducted at Kona North, T2K and Bana West where generally lower grade and non-continuous mineralisation was intercepted.
  • Deeper drilling conducted at Siou South, intersected higher grade mineralised zones adjacent to the planned underground development. In H2-2021 further drilling will focus on delineating these higher grade zones.
  • At Nyafe, historic drilling and exploitation activities were largely restricted to defining and mining oxide ore due to the refractive nature of the sulphide mineralisation. Scout diamond holes drilled beneath the pits confirmed the down-dip continuation of the structures and higher grade mineralisation. Further drilling is planned to start in late 2021.

4.7.    Sabodala-Massawa Gold Mine, Senegal

Table 25: Sabodala-Massawa Key Performance Indicators5

    THREE MONTHS ENDED SIX MONTHS ENDED
  Unit 30 June 2021 30 June 2020 30 June 2021 30 June 2020
Operating Data          
Tonnes ore mined kt 2,111 3,167
Tonnes of waste mined kt 8,687 13,462
Tonnes milled kt 1,067 1,617
Average gold grade milled g/t 3.20 2.97
Recovery rate % 89 90
Gold produced oz 95,856 134,804
Gold sold oz 99,467 151,016
Realised gold price1 $/oz 1,779 1,752
Financial Data ($'000)          
Revenue1 $ 176,965    —    264,534    —   
Operating expenses $ (57,186)   —    (94,330)   —   
Royalties $ (9,913)   —    (14,854)   —   
Non-cash operating expenses3 $ 12,632    —    25,640    —   
Total Cash Cost2 $ (54,467)   —    (83,544)   —   
Sustaining capital2 $ (8,923)   —    (18,446)   —   
Total All-In Sustaining Costs2 $ (63,390)   —    (101,990)   —   
Non-sustaining capital2 $ (5,178)   —    (9,741)   —   
Total All-in Costs2 $ (68,568)   —    (111,731)   —   
All-In Margin2, 4 $ 108,397    —    152,803    —   
Cash cost per ounce sold2 $/oz 548    —    553    —   
Mine All-In Sustaining Costs per ounce sold2 $/oz 637    —    675    —   

1 Revenue and realised gold price are inclusive of the Sabodala-Massawa stream.
2 Non-GAAP measure. Refer to the non-GAAP Measures section for further details.

3 Non-cash operating expenses relates to the reversal in the period of the fair value adjustment of inventory on hand at the acquisition date.
4 All-In Margin is calculated as revenue less all-in costs for the period.
5 Analysis of operations is only for the period after its acquisition by Endeavour on 10 February 2021.

Q2-2021 Insights

  • Strong production of 95,856 ounces due to a higher throughput, better average gold grade milled as well as expected recovery rate and represents the first full quarter of production following the acquisition on 10 February 2021.
    • Total tonnes mined during the quarter were associated to favourable mining conditions and good productivity of mining equipment. Furthermore, the short haul road profile and short dumping sequencing also contributed to higher tonnes mined.
    • Ore mined was mainly sourced from Sofia Main and Sofia North pits on the Massawa lease following the completion of mining at Golouma West and Kourouloulou pits on the Sabodala lease in Q1-2021.
    • Tonnes milled were high due to a long processing plant run time despite a greater proportion of fresh ore materials milled. Ore tonnes milled comprised mainly fresh ore from the Sofia Main pit, supplemented by oxide material from Sofia North pit.
    • Average processed grades were high due to processing high grade fresh materials sourced from Sofia Main, supplemented by oxide ore from the Sofia North pit.
  • AISC of $637 per ounce was as expected due to planned sustaining capital as unit mining and unit processing cost remained as anticipated.
  • Sustaining capital expenditure of $8.9 million was related to purchases of additional mining equipment, TSF raise and planned waste capitalisation.
  • Non-sustaining capital expenditure of $5.2 million mostly related to the relocation activities of the Sabodala village, the new haul road and infrastructure developments at the Massawa permit mining areas.

H1-2021 Insights

  • Strong production of 134,804 ounces represents operations following the acquisition on 10 February 2021. Production ramped up in Q2-2021 due to longer operating time and higher processed grades, as the throughput rate remained constant.
    • Tonnes ore mined increased in Q2-2021 due to the longer operating time, lower strip ratio, favourable mining conditions and good productivity of mining equipment. Ore was mainly sourced from the Sofia Main and Sofia North during H1-2021 supplemented by ore from Golouma and Kourouloulou during Q1-2021.
    • Tonnes milled were mainly fresh materials from the Sofia Main pit while the oxide blend was sourced from the Sofia North during H1-2021 supplemented by oxide from Golouma West during Q1-2021.
    • The average processed grade for the period benefited from the processing of fresh high grade from the Sofia Main pit.

AISC per ounce was as expected due to conformity to mine plan, scheduled feed blend yielding a stable recovery rate, as well as anticipated sustaining capital expenditure.

Sustaining capital expenditure of $18.4 million was related to purchases of additional mining equipment, TSF raise and planned waste capitalisation.

Non-sustaining capital expenditure of $9.7 million mostly related to the relocation activities of the Sabodala village, the new haul road and infrastructure developments at the Massawa permit mining areas.

2021 Outlook

Given its strong H1-2021 performance, Sabodala-Massawa is well positioned to meet its FY-2021 production guidance of 310—330koz at an AISC of $690—740 per ounce, for the post acquisition period commencing on 10 February 2021.

The Sofia Main and Sofia North pits will continue to contribute the majority of the ore mined for the remainder of 2021, while waste extraction at Sofia North is expected to increase in H2-2021. Mill throughput and process grades are expected to slightly decrease in H2-2021, compared to Q2-2021, while recovery rates are expected to remain similar.

The sustaining capital spend outlook for FY-2021 is expected to be slightly above the previously guided $35.0 million, of which $18.4 million has been incurred in H1-2021, due to investments in mining fleet and additional equipment. The non-sustaining capital spend outlook for FY-2021 is expected to be slightly below the guided $47.0 million, of which $9.7 million has been incurred in H1-2021 due to the deferral of spend on the Sabodala relocation construction and development costs as a greater focus is placed on mining the Sofia pits.

Plant Expansion

The Massawa deposit is being integrated into the Sabodala mine through a two-phased approach, as outlined in the 2020 pre-feasibility study (“PFS”).

Phase 1 of the plant expansion will facilitate processing of an increased proportion of high grade, free-milling Massawa ore through the Sabodala processing plant.
Civil works for phase 1 are now complete ahead of schedule, and the installation and commissioning of the additional electrowinning cell, a carbon regeneration kiln, an acid wash and elution circuit, an additional leach tank and the gravity circuit has commenced and the project is on schedule for completion in Q4-2021. In H1-2021 a total of $7.6 million was incurred for the Phase 1 plant expansion and classified as growth capital, of which $0.3 million was incurred prior to its acquisition on 10 February 2021.
Phase 2 of the expansion will add an additional processing circuit to process the high grade refractory ore from the Massawa deposit. The definitive feasibility study (“DFS”) for Phase 2 is underway and is on track for completion in Q4-2021.

2021 Exploration Programme

An exploration programme of up to $13.0 million has been planned for 2021 of which $3.5 million was spent in H1-2021 consisting of 46,439 meters of drilling across 414 drillholes. The exploration efforts were focused on Samina, Tina and other non-refractory targets within the Massawa area. Following the exploration success, an updated resource is expected to be published in late 2021.
Drilling conducted at the Samina deposit focussed on extending the 500 meters mineralised strike length to over 900 meters, while mineralisation remains open to the north.
Drilling conducted at the Tina deposit focussed on expanding the inferred resources defined in 2019. The mineralised strike length has been extended by over 300 meters and the deposit remains open to the north and southeast.
Drilling conducted at the Sofia North deposit followed up on the previously identified Sofia North extension. The extension has been identified to extend over 800 meters along strike and is 150 meters wide, remaining open to the north.
During the remainder of 2021, exploration work will be focussed on defining resources at Samina, Tina and the Sofia North Extension as well as follow up drilling on other Massawa project area targets.

Wahgnion Gold Mine, Burkina Faso

Table 26: Wahgnion Key Performance Indicators4

    THREE MONTHS ENDED SIX MONTHS ENDED
  Unit 30 June 2021 30 June 2020 30 June 2021 30 June 2020
Operating Data          
Tonnes ore mined kt 1,187 1,836
Tonnes of waste mined kt 6,428 10,230
Tonnes milled kt 1,016 1,554
Average gold grade milled g/t 1.31 1.32
Recovery rate % 95 95
Gold produced oz 40,991 65,650
Gold sold oz 47,732 77,378
Realised gold price $/oz 1,805 1,794   
Financial Data ($'000)          
Revenue $ 86,133    —    138,788    —   
Operating expenses $ (39,952)   —    (66,192)   —   
Royalties $ (6,015)   —    (9,569)   —   
Non-cash operating expenses2 $ 1,665    —    9,344    —   
 Total Cash Cost1 $ (44,302)   —    (66,417)   —   
Sustaining capital1 $ (2,454)   —    (3,449)   —   
Total All-In Sustaining Costs1 $ (46,756)   —    (69,866)   —   
Non-sustaining capital1 $ (9,011)   —    (12,758)   —   
Total All-in Costs1 $ (55,767)   —    (82,624)   —   
All-In Margin1, 3 $ 30,366    —    56,164    —   
Cash cost per ounce sold1 $/oz 928    —    858    —   
Mine All-In Sustaining Costs per ounce sold1 $/oz 980    —    903    —   


1
Non-GAAP measure. Refer to the non-GAAP Measures section for further details.

2 Non-cash operating expenses relates to the reversal in the period of the fair value adjustment of inventory on hand at the acquisition date.
3 All-In Margin is calculated as revenue less all-in costs for the period.
4 Analysis of operations is only for the period after its acquisition by Endeavour on 10 February 2021.

Q2-2021 Insights

Strong production of 40,991 ounces was due to a high throughput and a high recovery rate despite a lower average gold grade milled. Production for Q2-2021 represents the first full quarter of production following the acquisition on 10 February 2021.

Tonnes of ore mined were mainly sourced from the Nogbele North and Nogbele South mining areas, supplemented with ore from the Fourkoura pit where mining commenced earlier this year.

Tonnes milled was a blend of greater quantities of oxide materials sourced from Nogbele North and Nogbele South and smaller oxide quantities from the Fourkoura pit while fresh materials mostly sourced from the Nogbele North pit.

Average gold grade milled was impacted by mining in low ore zones of the Nogbele South and Fourkoura pits due to focus on waste stripping.

AISC per ounce is in line with guidance despite an expected high waste capitalisation cost related to high strip ratio at the Fourkoura pits.

Sustaining capital expenditure of $2.5 million was related to waste capitalisation and other mining equipment and IT infrastructure upgrade.

Non-sustaining capital expenditure of $9.0 million related to the TSF stage 2 raise, construction of the airstrip and Foukoura resettlement costs.

H1-2021 Insights

Production represents operations following the acquisition on 10 February 2021. Production was higher in Q2-2021 due to a full quarter of operations and a higher grade which more than offset a lower grade and a shorter consolidation period in Q1-2021.

Total tonnes mined increased in the second quarter due to the consolidation of a full quarter of results in Q2-2021. Tonnes of ore mined were mainly sourced from the Nogbele North and Nogbele South Pits, supplemented with ore from the Fourkoura pit where mining commenced earlier this year.

Tonnes milled were mainly oxide materials sourced from Nogbele North pit during H1-2021 supplemented by fresh ore from Fourkoura and oxide from Nogbele South during Q1-2021 and Q2-2021 respectively.

Average gold grade milled was impacted by mining in low ore zones of the Nogbele South and Fourkoura pits due to focus on waste stripping during the period.

AISC per ounce is in line with guidance as sustaining capital expenditure, unit mining cost and unit processing cost were as expected.

Sustaining capital expenditure of $3.4 million was related to waste capitalisation and other mining equipment and IT infrastructure upgrades.

Non-sustaining capital expenditure of $12.8 million related to the TSF stage 2 raise, construction of the airstrip and Foukoura resettlement costs.

2021 Outlook

Given its strong H1-2021 performance, Wahgnion is well positioned to meet its FY-2021 production guidance of 140—155koz at an AISC of $940—990 per ounce, for the post acquisition period commencing on 10 February 2021.

Mining is expected to continue at Nogbele North, Nogbele South, and Fourkoura pits with significant waste development continuing throughout the year. Plant throughput is expected to decrease in H2-2021 compared to H1-2021 due to the wet season and a higher proportion of fresh ore being processed, while process grades are expected to increase and recovery rates to slightly decline.

The sustaining capital spend outlook for FY-2021 remains unchanged compared to the initial guidance of $14.0 million, of which $3.4 million has been incurred in H1-2021, with the remaining spend mainly related to waste extraction. The non-sustaining capital spend outlook for FY-2021 also remains unchanged compared to the initial guidance of $26.0 million, of which $12.8 million has been incurred in H1-2021. The H2-2021 non-sustaining spend mainly relates to construction of a second TSF cell.

2021 Exploration Programme

An exploration programme of up to $12.0 million has been planned for 2021 of which $2.6 million was spent in H1-2021 consisting of 9,565 meters of drilling across 81 drillholes. The exploration efforts focused on Nogbele North and Nogbele South deposits, targeting the continuation of mineralised structures between the Nogbele pits.

Exploration efforts are expected to ramp up in H2-2021, and will continue to focus on the extension and expansion of the Nogbele mineralisation. Additionally, the north-northeast continuation of the Fourkoura deposit and the Hillside target will be tested for extensions. Reconnaissance drilling at various attractive targets such as Kafina West and Korindougou will also be completed in H2-2021.

DISCONTINUED OPERATIONS

Agbaou Gold Mine, Côte d’Ivoire

Table 27: Agbaou Key Performance Indicators

    THREE MONTHS ENDED SIX MONTHS ENDED
  Unit 30 June
2021
30 June
2020
30 June
2021
30 June
2020
Operating Data          
Tonnes ore mined kt 659 353 1,416
Tonnes of waste mined kt 4,589 2,102 10,265
Tonnes milled kt 675 348 1,407
Average gold grade milled g/t 1.14 1.09 1.23
Recovery rate % 94    95    94   
Gold produced oz 24,437 12,575 51,897
Gold sold oz 25,067 14,045 52,490
Realised gold price $/oz 1,735 1,810 1,659
Financial Data ($'000)          
Revenue $ —    43,503    25,426    87,084   
Operating expenses $ —    (20,080)   (14,250)   (38,391)  
Royalties $ —    (2,464)   (1,418)   (4,797)  
Total Cash Cost1 $ —    (22,544)   (15,668)   (43,188)  
Sustaining capital1 $ —    (1,386)   (223)   (6,822)  
Total All-in Sustaining Costs1 $ —    (23,930)   (15,891)   (50,011)  
Non-sustaining capital1 $ —    (316)   (25)   (450)  
All-In Margin1, 2 $ —    19,257    9,510    36,623   
Cash cost per ounce sold1 $/oz —    899    1,116    823   
Mine All-In Sustaining Costs per ounce sold1 $/oz —    955    1,131    953   

1 Non-GAAP measure. Refer to the non-GAAP Measures section for further details.

2 All-In Margin is calculated as revenue less all-in costs for the period.
3 Analysis of operations is only for the period up to its disposal by Endeavour on 1 March 2021.

On 1 March 2021, the Company completed the sale of its 85% interest in the Agbaou mine cash generating unit to Allied Gold Corp Limited ("Allied"). The consideration upon sale of the Agbaou mine included (i) a cash payment of $16.4 million (net of working capital adjustments of $3.6 million upon closing), of which $10.5 million was received in the first quarter of 2021; (ii) $40.0 million in Allied shares of which Endeavour has the option to sell the shares back to Allied at the issue price which expires on 31 December 2022 or earlier if Allied conducts an IPO before then; (iii) contingent consideration of up to $20.0 million comprised of $5.0 million payments for each quarter where the average gold price exceeds $1,900 per ounce; and (iv) a net smelter royalty ("NSR") on ounces produced in excess of the Agbaou reserves estimated as at 31 December 2019. The NSR royalty is based on a sliding scale, linked to the average spot gold price as follows: 2.5% if the gold price is at least $1,400 per ounce, 2% if the gold price is at least $1,200 per ounce and less than $1,400 per ounce, 1% if the gold price is at least $1,000 per ounce and less than $1,200 per ounce, and 0% if the gold price is below $1,000 per ounce.

H1-2021 vs H1-2020 Insights

Production decreased compared to same period in prior year due to operating the mine for a shorter period as the operations was discontinued through a sale. Average grade decreased due to lower grade at the deeper elevation of the North, West and South pits mined. Recovery rate remained flat.
AISC increased in line with expectation as a result of lower ounces sold as well as higher mining cost and higher processing cost. This was partially offset by lower sustaining capital spend.

FINANCIAL REVIEW

STATEMENT OF COMPREHENSIVE EARNINGS/(LOSS)

Table 28: Statement of Comprehensive Earnings/(Loss)

    THREE MONTHS ENDED SIX MONTHS ENDED
($'000s) Notes 30 June
2021
30 June
2020
30 June
2021
30 June
2020
Revenue [1] 753,427    209,582    1,389,219    435,902   
Operating expenses [2] (278,161)   (83,227)   (531,109)   (179,320)  
Depreciation and depletion [3] (158,382)   (35,465)   (290,246)   (78,393)  
Royalties [4] (43,908)   (15,306)   (88,274)   (30,426)  
Earnings from mine operations   272,976    75,584    479,590    147,763   
Corporate costs [5] (15,890)   (5,049)   (30,161)   (10,280)  
Acquisition and restructuring costs [6] (14,544)   (2,589)   (26,704)   (6,919)  
Share-based compensation [7] (9,839)   (4,942)   (17,794)   (6,565)  
Exploration costs [8] (5,874)   (1,796)   (15,684)   (3,129)  
Earnings from operations   226,829    61,208    389,247    120,870   
(Loss)/gain on financial instruments [9] (14,807)   (72,257)   27,270    (74,956)  
Finance costs [10] (13,694)   (11,818)   (26,012)   (23,321)  
Other (expense)/income [11] (7,082)   (1,791)   (10,510)   144   
Earnings before taxes   191,246    (24,658)   379,995    22,737   
Current income tax expense [12] (44,463)   (263)   (116,611)   (19,269)  
Deferred income tax recovery/(expense) [12] 2,166    (5,597)   (3,504)   (6,504)  
Net earnings/(loss) from discontinued operations   —    7,902    (3,702)   15,883   
Net comprehensive earnings/(loss)   148,949    (22,616)   256,178    12,847   

Review of results for the three and six months ended 30 June 2021:

Revenue for Q2-2021 was $753.4 million compared to $209.6 million for Q2-2020. The increase in revenue in Q2-2021 over Q2-2020 was mainly due to the acquisition of the Wahgnion and Sabodala-Massawa operating mines on 10 February 2021 and the acquisition of the Mana and Boungou operating mines on 1 July 2020. During Q2-2021, the Wahgnion, Sabodala-Massawa, Mana and Boungou mines contributed 234,942 ounces amounting to $421.3 million of the consolidated revenue while the legacy mines contributed 185,819 ounces amounting to $332.2 million. With respect to the three legacy operations, an increase in total ounces sold favourably impacted revenue by $104.2 million while an increase in average realised price favourably impacted revenue by $18.4 million.

Revenue for H1-2021 increased by 219% compared to H1-2020 due to the acquired Mana, Boungou, Wahgnion and Sabodala-Massawa mines, subsequent to H1-2020, which contributed a total of $771.6 million to revenue for the six months ended 30 June 2021. The realised gold price increased from $1,603 per ounce in H1-2020 to $1,771 per ounce in H1-2021 which accounted for an increase in revenue of approximately $53.4 million for the Company’s three legacy continuing operations. In addition, an additional 77,837 ounces sold in H1-2021 compared to H1-2020 from the Company’s three legacy mines favourably impacted revenue by $128.3 million.

Operating expenses for Q2-2021 were $278.2 million compared to $83.2 million in Q2-2020. The increase in operating expenses is mainly due to the addition of the Wahgnion, Sabodala-Massawa, Mana and Boungou mines , with attributable operating expenses of $161.6 million for the current quarter. Additionally, operating expenses increased at Ity by $22.1 million due to higher mining and processing cost on account of ore sourced from the Daapleu pit which has a longer hauling distance and associated higher reagent consumption cost. Operating expenses increased by $8.0 million at Karma as a result of increased cyanide consumption due to processing a higher proportion of GG1 materials.

The significant increase in operating expenses in H1-2021 compared to the same period in the prior year was due to the addition of the Mana and Boungou mines, which were acquired on 1 July 2020, as well as the acquisition of the Wahgnion and Sabodala-Massawa mines, which were acquired on 10 February 2021. The total operating expenses for the four additional mines was $305.1 million. Ity, Karma and Hounde mine’s operating expenses were higher in H1-2021 compared to same period in 2020 due to increased contractor mining costs as well as increased production at Ity and Houndé.

Depreciation and depletion in Q2-2021 was $158.4 million compared to $35.5 million in Q2-2020 with the increase mainly attributable to the acquisition of the Wahgnion, Sabodala-Massawa, Mana and Boungou mines. Depreciation and depletion increased in H1-2021 by $211.9 million compared to H1-2020 with the inclusion of Mana, Boungou, Wahgnion and Sabodala-Massawa subsequent to H1-2020. The depletion charge also reflects the higher carrying values for the mining interests upon determination of the fair values of the various mines upon acquisition.

Royalties were $43.9 million for Q2-2021, compared to $15.3 million in Q2-2020, and $88.3 million in H1-2021 compared to $30.4 million in H1-2020. The increase in royalty expense in the quarter and the year to date is due to the inclusion of the Wahgnion and Sabodala-Massawa mines acquired on 10 February, 2021, and the Mana and Boungou mines acquired on 1 July, 2020. Royalties were further impacted by the increase in the realised gold price, which influenced the underlying royalty rate based on the applicable sliding scale (in Burkina Faso, a spot price of gold above $1,300 per ounce increases the government royalty rates from 4.0% to 5.0%, and in Côte d'Ivoire, a spot price of gold above $1,600 per ounce increases the royalty rates from 4.0% to 5.0%). The gold royalty rate in Senegal is a flat 5%.

Corporate costs were $15.9 million for Q2-2021 compared to $5.0 million for Q2-2020, and $30.2 million for H1-2021 compared to $10.3 million for H1-2020. The increase in corporate costs are primarily due to costs associated with listing on the LSE as well as additional corporate costs following the integration of SEMAFO Inc. (“SEMAFO”) and Teranga head office costs.

Acquisition and restructuring costs were $14.5 million in Q2-2021 compared to $2.6 million in Q2-2020, and $26.7 million in H1-2021 compared to $6.9 million in H1-2020. Costs increased in 2021 compared to the comparative period due to the acquisition of SEMAFO on 1 July 2020, and Teranga on 10 February 2021 and the costs related to the integration of the two entities into the Endeavour Group.

Share based compensation was $9.8 million in Q2-2021 compared to $4.9 million for Q2-2020, and $17.8 million in H1-2021 compared to $6.6 million in H1-2020. The increase is mainly due to the increase in fair value of performance share units (“PSUs”) granted. The fair value of the PSUs is determined based on total shareholder return relative to peer companies and achieving certain operational performance measures.

Exploration costs in Q2-2021 were $5.9 million compared to $1.8 million in Q2-2020, and $15.7 million in H1-2021 compared to $3.1 million in H1-2020. The increase in exploration cost is related to a larger exploration portfolio and increased greenfield exploration activities mainly at the newly acquired Teranga exploration properties.

The loss on financial instruments was $14.8 million in Q2-2021 compared to a loss of $72.3 million in Q2-2020. The loss in Q2-2021 is mainly due to the net impact of a loss on change in fair value of the warrant liabilities and call rights of $5.3 million and $7.0 million respectively, and foreign exchange losses of $7.2 million. In H1-2021 there was a gain on financial instruments of $27.3 million compared to a loss in the comparative prior period of $75.0 million The gain in H1-2021 is primarily due to the net impact of the unrealised gain/(loss) on convertible senior bond derivative of $30.0 million, loss on foreign exchange of $6.2 million, and a loss on change in fair value of warrant liabilities $1.5 million.

Finance costs were $13.7 million for Q2-2021 compared to $11.8 million in Q2-2020, and $26.0 million in H1-2021 compared to $23.3 million in H1-2020. Finance costs are primarily associated with interest expense on the revolving credit facility (“RCF”) and bridge facility, convertible debt, finance obligations, and lease liabilities.

Other expenses increased from $1.8 million in Q2-2020 to $7.1 million for Q2-2021 mainly due to a loss on disposal of assets at Ity of $2.4 million. Other expenses for H1-2021 was $10.5 million compared to an income of $0.1 million in H1-2020. Other expense for H1-2021 mainly relates to the loss on disposal of assets at Ity, as well as legal and covid related expenses at Corporate of $1.6 million.

Current income tax expense was $44.5 million and $116.6 million in Q2-2021 and H1-2021 respectively compared to $0.3 million and $19.3 million in Q2-2020 and H1-2020 respectively. Current income tax expense for Q2-2021 increased in comparison to Q2-2020 primarily due to the inclusion of the current tax expense at the Mana and Boungou mines which were acquired at the start of Q3-2020 along with the Wahgnion and Sabodala-Massawa mines acquired in Q1-2021. Current income tax expense for H1-2021 increased when compared to H1-2020 due to the inclusion of the Wahgnion and Sabodala-Massawa mines acquired in Q1-2021.

CASH FLOWS

Table 29: Summarised cash flows

      THREE MONTHS ENDED SIX MONTHS ENDED
($'000s) Note Unit 30 June
2021
30 June
2020
30 June
2021
30 June
2020
Operating cash flows before changes in working capital [1] $ 285,650    74,909    549,068    170,238   
Changes in working capital [2] $ 14,825    (21,412)   (41,850)   (16,842)  
Cash generated from/(used by) discontinued operations   $ —    3,887    (8,808)   29,975   
Cash generated from operating activities [3] $ 300,475    57,384    498,410    183,371   
Cash used by investing activities [4] $ (137,311)   (48,091)   (242,584)   (105,325)  
Cash (used in)/generated from financing activities [5] $ (191,772)   (15,828)   (127,159)   83,732   
Effect of exchange rate changes on cash   $ (6,710)   1,009    (10,465)   150   
(Decrease)/increase in cash   $ (35,318)   (5,526)   118,202    161,928   

Operating cash flows before changes in working capital for Q2-2021 and H1-2021 were $285.7 million and $549.1 million respectively compared to $74.9 million in Q2-2020 and $170.2 million in H1-2020. The increase in the comparative periods is attributable to the acquisition of the Wahgnion and Sabodala-Massawa operating mines on 10 February 2021 and the acquisition of the Mana and Boungou operating mines on 1 July 2020, as well as a higher realised gold price.

Income taxes paid were $106.5 million in Q2-2021 and $130.1 million in H1-2021 compared to $8.2 million and $16.8 million in Q2-2020 and H1-2020, respectively. These higher cash payments relative to the comparative periods are reflective of the increase in the Company’s earnings and higher provisional payments in 2021 based on 2020 earnings. Taxes paid for the three and six months ended 30 June 2020 are displayed in the table below:

Table 30: Tax payments

  THREE MONTHS ENDED SIX MONTHS ENDED
($'000s) 30 June 2021 30 June 2020 30 June 2021 30 June 2020
Boungou 32,411    n.a. 33,811    n.a.
Houndé 23,009    724    26,509    6,757   
Ity 21,097    7,509    27,597    7,500   
Karma 1,172    —    1,172    —   
Mana 5,005    n.a. 5,005    n.a.
Sabodala-Massawa 13,564    n.a. 19,364    n.a.
Wahgnion 7,851    n.a. 7,851    n.a.
Other 2,381    —    8,755    2,500   
Taxes from continuing operations 106,490    8,233    130,064    16,757   
Agbaou —    11,915    19,918    11,900   
Consolidated taxes paid 106,490    20,148    149,982    28,657   

The Q2-2021 and H1-2021 change in working capital is an inflow of $14.8 million and an outflow of $41.9 million respectively, which is broken down as follows:

Receivables were an inflow of $11.0 million for Q2-2021 and an outflow of $5.4 million for H1-2021. The inflow in Q2-2021 is mainly due to a decrease in amounts receivable from a third party at corporate of $8.0 million. The H1-2021 outflow is mainly due to the increase in VAT receivable at Mana, Houndé and Boungou mines.

Inventories were an inflow of $4.1 million for Q2-2021 and an inflow of $24.8 million in H1-2021. The inflow in Q2-2021 due primarily to the decrease in inventory stockpiles and finished gold balances at Ity, Sabodala-Massawa and Wahgnion which were slightly offset by an increase in gold in circuit (“GIC”) at Mana and Sabodala-Massawa. The inflow in H1-2021 is mainly due to a decrease in finished goods and consumables at Ity, Sabodala-Massawa, Wahgnion and Mana offset partially by an increase in stockpiles at Sabodala-Massawa and Houndé.

Prepaid expenses and other was an inflow of $9.0 million for Q2-2021 and an outflow of $3.9 million for H1-2021 . The inflow in Q2-2021 was mainly due to a decrease in prepayments at Boungou of $3.9 million and at Sabodala-Massawa of $3.7 million. The outflow for H1-2021 was mainly due to an increase in prepaid capital at Sabodala-Massawa of $5.2 million offset by a decrease in prepayments at Boungou of $1.8 million.

Accounts payable was an outflow of $9.3 million in Q2-2021 and $57.4 million in H1-2021. The outflow in Q2-2021 mainly relates to payments made at Ity and Mana, while payments made at Houndé and acquisition related costs paid in relation to the Teranga acquisition also contributed to the outflow in H1-2021.

Operating cash flows after changes in working capital in Q2-2021 and H1-2021 were $300.5 million and $498.4 million respectively compared to $57.4 million and $183.4 million in Q2-2020 and H1-2020 respectively. Q2-2021 increased by $243.1 million compared to Q2-2020 mainly due to a higher realised gold price and the inflow in working capital due to the reduction in receivable balances and inventories as well the production from the newly acquired mines. H1-2021 has increased by $315.0 million relative to H1 2020 due to increased production for the year from the Company’s existing mines, as well as from the Wahgnion, Sabodala-Massawa, Mana and Boungou mines, at higher realised gold prices.

Cash flows used by investing activities were $137.3 million and $242.6 million in Q2-2021 and H1-2021 respectively compared to and $48.1 million and $105.3 million in Q2-2020 and H1-2020 respectively. The Q2-2021 amount has increased relative to Q2-2020 mainly due to expenditure on mining interests of $144.0 million given the increase in the size of the Group’s operations.

Cash flows used in financing activities were $191.8 million and $127.2 million in Q2-2021 and H1-2021 respectively compared to a cash outflow of $15.8 million and a cash inflow of $83.7 million in Q2-2020 and H1-2020 respectively. A repayment of long-term debt of $120.0 million, payments for the acquisition of the Company’s own shares of $59.5 million and repayments of finance and lease obligations of $7.9 million. The outflow in H1-2021 was due to a net repayment of long-term debt of $73.0 million, a payment of dividends amounting to $60.0 million, the settlement of the gold offtake agreement which was acquired from Teranga amounting to $49.7 million, repayments of lease obligations of $18.7 million offset by proceeds received from the issue of common shares of $200.0 million.

SUMMARISED STATEMENT OF FINANCIAL POSITION

Table 31: Summarised Statement of Financial Position

($'000s) As at
30 June
2021
As at
31 December
2020
ASSETS    
Cash 832,877    644,970   
Other current assets 517,614    272,059   
Current assets excluding assets held for sale 1,350,491    917,029   
Assets held for sale —    180,808   
Total current assets 1,350,491    1,097,837   
Mining interests 5,039,323    2,577,844   
Deferred income taxes 9,960    19,774   
Other long term assets 485,995    173,740   
TOTAL ASSETS 6,885,769    3,869,195   
LIABILITIES    
Other current liabilities 421,459    275,935   
Income taxes payable  219,134    134,205   
Current liabilities excluding liabilities held for sale 640,593    410,140   
Liabilities held for sale —    112,796   
Total current liabilities 640,593    522,936   
Long-term debt 929,760    688,266   
Environmental rehabilitation provision 128,169    78,011   
Other long-term liabilities 131,152    26,463   
Deferred income taxes 614,390    305,101   
TOTAL LIABILITIES 2,444,064    1,620,777   
TOTAL EQUITY 4,441,705    2,248,418   
TOTAL EQUITY AND LIABILITIES 6,885,769    3,869,195   
     

 


Other current assets as at 30 June 2021 consists of $127.8 million of trade and other receivables, $349.5 million of inventories and $40.3 million of prepaid expenses and other.

Trade and other receivables increased by $72.7 million compared to 31 December 2020 mainly due to the inclusion of VAT receivable acquired at Wahgnion mine, as well as increases in VAT at Houndé, Mana, Boungou and Karma in the period and an increase in other amounts receivable at Ity relating to the sale of mining equipment to the mining contractor. VAT received during the six months ended 30 June 2021 was $40.0 million consisting of proceeds from Mana mine ($4.0 million), Hounde mine ($15.4 million), Boungou mine ($3.3 million), Karma mine ($8.0 million) and Wahgnion mine ($9.4 million).

Inventories increased by $158.9 million primarily due to the inclusion of the inventories at the Wahgnion and Sabodala-Masawa mines, offset by decrease in stockpiles and GIC at the Company’s legacy operating mines.

Prepaid expenses and other increased by $14.0 million primarily due to the prepayments acquired from the Wahgnion and Sabodala-Massawa mines.

Mining interests increased by $2.5 billion primarily due to the acquisition of mineral property of the Teranga assets.

Other long-term assets are made up of $262.2 million of goodwill related to the Semafo and Teranga acquisitions, $146.7 million of long-term stockpiles not expected to be used in the next twelve months at the Ity, Sabodala-Massawa and Houndé mines, $47.2 million long-term asset related to the sale of Agbaou, as well as $29.7 million of restricted cash relating to reclamation bonds. Other long-term assets increased by $312.3 million in 2021 compared to Q4-2020 mainly due to the recognition of goodwill arising from the transaction with Teranga, as well as the long-term asset of $45.9 million recognised for the sale of Agbaou.

Other current liabilities are made up of $374.0 million of trade and other payables, $31.3 million of derivatives related to warrants and call-rights, and $16.1 million of lease obligations. Trade and other payables increased by $111.7 million mainly due to the inclusion of the Teranga assets accounting for an additional $110.9 million compared to prior year.

Income taxes payable increased by $84.9 million compared to the prior year and is due to the inclusion of Wahgnion and Sabodala-Massawa mines during the quarter.

LIQUIDITY AND FINANCIAL CONDITION

Net Debt Position

The following table summarises the Company’s net debt position as at 30 June 2021 and 31 December 2020.

Table 32: Net Debt Position

($'000s) 30 June
2021
31 December

2020
Cash and cash equivalents 832,877    644,970   
Cash included in assets held for sale —    69,705   
Less: Convertible senior bond (330,000)   (330,000)  
Less: Drawn portion of corporate loan facilities1 (580,000)   (310,000)  
Net (Debt)/Cash (77,123)   74,675   
Net Debt/(Cash) / Adjusted EBITDA LTM ratio2 0.07    (0.09)  

1Corporate loan facilities are presented at face value.

2 Adjusted EBITDA is per table 35 and is calculated using the trailing twelve months Adjusted EBITDA as presented in prior reporting.

Equity and Capital

On 14 June 2021, the Company announced its entire issued ordinary share capital consisting of 250,491,775 shares had been admitted to the premium listing segment of the LSE. The Company no longer has authorised share capital. The table below summarises Endeavour’s share structure at 30 June 2021.

Table 33: Outstanding Shares

  30 June
2021
31 December

2020
Shares issued and outstanding 250,553,482    163,036,473   
Stock options 2,059,394    —   

As at 3 August 2021, the Company had 250,025,450 shares issued and outstanding, and 2,055,394 outstanding stock options.

As part of the Company’s share buyback programme, subsequent to 30 June 2021 and up to 3 August 2021, the Company has repurchased a total of 363,497 shares at an average price of $23.0, for total cash outflows of $8.4 million.

Going Concern

The directors have performed an assessment of whether the Company would be able to continue as a going concern for at least the next twelve-month period. In their assessment, the Company has taken into account its financial position, expected future trading performance, its debt and other available credit facilities, future debt servicing requirements, its working capital and capital expenditure commitments and forecasts.

At 30 June 2021, the Company’s net debt was $77.1 million with gross debt of $910.0 million and gross liquid funds of $832.9 million.

Based on a detailed cash flow forecast prepared by management, in which it included any reasonably possible change in the key assumptions on which the cash flow forecast is based, and taking into account possible changes in performance due to the COVID-19 pandemic impact, the Directors have a reasonable expectation that the Group will have adequate resources to continue in operational existence for twelve months from 3 August 2021 and that at this point in time there are no material uncertainties regarding going concern. Key assumptions underpinning this forecast include a gold price of $1,500 per ounce and production volumes in line with annual guidance.

The Board is satisfied that the going concern basis of accounting is an appropriate assumption to adopt in the preparation of the half year report for the period ended 30 June 2021.

RELATED PARTY TRANSACTIONS

A related party is considered to include shareholders, affiliates, associates and entities under common control with the Company and members of key management personnel.

Key management compensation

During the six months ended 30 June 2021, an amount of $13.5 million was paid to key management personnel as incentive awards for the completion of the Teranga and SEMAFO acquisitions and the successful listing on the LSE, as well as for termination benefits following the acquisition of SEMAFO and Teranga.

Other related party transactions

During the six-month period ended 30 June 2021, the Company entered into a transaction with La Mancha Holding S.àr.l. (“La Mancha”) when La Mancha exercised its anti-dilution right to maintain its interest in the Company and completed a $200.0 million private placement for 8,910,592 shares of Endeavour. La Mancha’s future anti-dilution rights have now been extinguished and La Mancha’s ownership interest in Endeavour was 19.1% at 30 June 2021 (31 December 2021 - 24.1%).

During the six-month period ended 30 June 2021, and prior to the Company listing on the London Stock Exchange, the Company established an Employee Benefits Trust (“EBT”) in connection with the Company’s employee share incentive plans , which may hold repurchased shares on trust to settle future employee share incentive obligations. During the three months ended 30 June 2021, the EBT acquired 576,308 outstanding common shares from certain employees of the Group, which remain held in the EBT at 30 June 2021. In exchange for the shares, the Group is obligated to repay the employees cash for the fair value of the underlying shares of the Company now held in the EBT. The amount of this liability is $12.4 million at 30 June 2021 and is included in current financial liabilities.

ACCOUNTING POLICIES AND CRITICAL JUDGEMENTS

Critical judgements and key sources of estimation uncertainty

The Company’s management has made critical judgments and estimates in the process of applying the Company’s accounting policies to the consolidated financial statements that have significant effects on the amounts recognised in the Company’s consolidated financial statements. These judgements and estimations include commencement of commercial production, determination of economic viability, functional currency, indicators of impairment and impairment of mining interests, assets held for sale and discontinued operations, value added tax, estimated recoverable ounces, mineral reserves, environmental rehabilitation costs, share-based payments, net realisable value and obsolete stock provisions of inventories, current income tax provisions, business combinations, capitalisation of waste stripping, the Purchase Price Allocation (“PPA”) of the SEMAFO acquisition. and the PPA of the Teranga acquisition, which is still provisional. The judgements applied in the period ended 30 June 2021 are consistent with those in the consolidated financial statements for the year ended 31 December 2020, except for the judgements and estimates made relating to the acquisition of Teranga in the quarter ended 31 March, 2021.

6. USE OF PROCEEDS

In the Company’s prospectus supplement dated 29 March 2021 to the short form base shelf prospectus dated 17 June 2020, the Company disclosed that they intended to use the proceeds of $200.0 million from the issuance of approximately 8.9 million common shares to partially repay outstanding indebtedness under the refinancing of the debt upon the acquisition of Teranga and for general corporate purposes. The Company repaid $120.0 million of the outstanding balance of the revolving credit facility in Q2-2021. The remainder of the proceeds are included in the Company’s cash and cash equivalents at 30 June 2021 and are being used for general working capital purposes, including fees related to the acquisition and integration of Teranga, expenses related to the London listing, as well as general corporate costs. There has been no change on how the remaining proceeds are expected to be used.

In the Company’s prospectus supplement dated 2 July 2020 to the short form base shelf prospectus dated 17 June 2020, the Company disclosed that they intended to use the proceeds of $100.0 million from the issuance of approximately 4.5 million common shares for general corporate purposes. As disclosed in the prospectus supplement, the Company has used the proceeds from that financing for general corporate purposes over the past twelve months, including for costs related to the acquisition and integration of SEMAFO, as well as general corporate costs.

NON-GAAP MEASURES

This Management Report as well as the Company’s other disclosures contain multiple non-GAAP measures, which the Company believes that, in addition to conventional measures prepared in accordance with GAAP, certain investors use to assess the performance of the Company. These do not have a standard meaning and are intended to provide additional information which are not necessarily comparable with similar measures used by other companies and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP. The definitions of these measures, and the reconciliation to the amounts presented in the condensed interim consolidated financial statements, and the reasons for these measures are included below. The non-GAAP measures are consistent with those presented previously and there have been no changes to the bases of calculation, except with respect to the determination of free cash flows, the definition of which has been changed to be more consistent with our peers and reflective of how management evaluates the free cash flows of the Company.

ALL-IN MARGIN

The Company believes that, in addition to conventional measures prepared in accordance with GAAP, certain investors use the all-in margin and adjusted earnings before interest, tax, depreciation and amortisation (“Adjusted EBITDA”) to evaluate the Company’s performance and ability to generate cash flows and service debt. These do not have a standard meaning and are intended to provide additional information which are not necessarily comparable with similar measures used by other companies and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP. The following tables provide the illustration of the calculation of this margin, for the three and six months ended 30 June 2021 and 30 June 2020.

Table 34: All-In Sustaining Margin and All-In Margin

  THREE MONTHS ENDED SIX MONTHS ENDED
($'000s) 30 June
2021
30 June
2020
30 June
2021
30 June
2020
Revenue 753,427    209,582    1,389,219    435,902   
Less: Total cash costs (306,776)   (96,607)   (579,691)   (207,820)  
Less: Corporate G&A1 (10,539)   (5,049)   (21,948)   (10,280)  
Less: Sustaining capital (41,509)   (15,398)   (69,106)   (28,934)  
All-in sustaining margin from continuing operations 394,603    92,528    718,474    188,868   
Gold ounces sold 420,761    124,761    784,279    271,892   
All-in sustaining margin per ounce sold from continuing operations 938    742    916    695   
Less: Non-Sustaining capital (58,243)   (21,793)   (115,089)   (39,379)  
Less: Non-Sustaining exploration (26,762)   (17,346)   (33,036)   (32,492)  
All-in margin from continuing operations 309,598    53,389    570,349    116,997   

EBITDA AND ADJUSTED EBITDA

The Company believes that, in addition to conventional measures prepared in accordance with GAAP, certain investors use the earnings before interest, tax, depreciation and amortization (“EBITDA”) and the adjusted earnings before interest, tax, depreciation and amortisation (“Adjusted EBITDA”) to evaluate the Company’s performance and ability to generate cash flows and service debt. The following tables provide the illustration of the calculation of this margin, for the three and six months ended 30 June 2021 and 30 June 2020.

Table 35: EBITDA and Adjusted EBITDA

  THREE MONTHS ENDED SIX MONTHS ENDED
($'000s) 30 June
2021
30 June
2020
30 June
2021
30 June
2020
Earnings/(Loss) before taxes 191,246    (24,658)   379,995    22,737   
Add back: Depreciation and depletion 158,382    35,465    290,246    78,393   
Add back: Finance costs 13,694    11,818    26,012    23,321   
EBITDA from continuing operations 363,322    22,625    696,253    124,451   
Add back: Acquisition and restructuring costs 14,544    2,589    26,704    6,919   
Add back: Other expense/(income) 7,082    1,791    10,510    (144)  
Add back: Loss/(gain) on financial instruments 14,807    72,257    (27,270)   74,956   
Adjusted EBITDA from continuing operations 399,755    99,262    706,197    206,182   

CASH AND ALL-IN SUSTAINING COST PER OUNCE OF GOLD SOLD

The Company reports cash costs and all-in sustaining costs based on ounces of gold sold. The Company believes that, in addition to conventional measures prepared in accordance with GAAP, certain investors may find this information useful to evaluate the costs of production per ounce. The following table provides a reconciliation of cash costs per ounce of gold sold, for the three and six months ended 30 June 2021 and 30 June 2020.

Table 36: Cash Costs

  THREE MONTHS ENDED SIX MONTHS ENDED
($'000s except ounces sold) 30 June
2021
30 June
2020
30 June
2021
30 June
2020
         
Operating expenses from mine operations (278,161)   (83,227)   (531,109)   (179,320)  
Royalties (43,908)   (15,306)   (88,274)   (30,426)  
Non-cash and other adjustments 15,293    1,926    39,692    1,926   
Cash costs from continuing operations (306,776)   (96,607)   (579,691)   (207,820)  
Gold ounces sold 420,761    124,761    784,279    271,892   
Total cash cost per ounce of gold sold from continuing operations 729    774    739    764   
Cash costs from discontinued operations —    (22,546)   (15,668)   (43,188)  
Total cash costs (306,776)   (119,153)   (595,359)   (251,008)  
Gold ounces sold 420,761    149,828    798,324    324,382   
Total cash cost per ounce of gold sold 729    795    746    774   
         

The Company is reporting all‐in sustaining costs per ounce sold. This non‐GAAP measure provides investors with transparency regarding the total cash cost of producing an ounce of gold in each period, including those capital expenditures that are required for sustaining the on-going operation of the mines.

Table 37: All-In Sustaining Costs

  THREE MONTHS ENDED SIX MONTHS ENDED
($'000s except ounces sold) 30 June 2021 30 June 2020 30 June 2021 30 June 2020
         
Total cash costs for ounces sold from continuing operations (306,776)   (96,607)   (579,691)   (207,820)  
Corporate G&A1 (10,539)   (5,049)   (21,948)   (10,280)  
Sustaining Capital (41,509)   (15,398)   (69,106)   (28,934)  
All-in sustaining costs from continuing operations (358,824)   (117,054)   (670,745)   (247,034)  
Gold ounces sold 420,761    124,761    784,279    271,892   
All-in sustaining costs per ounce sold from continuing operations 853    938    855    909   
         
Including discontinued operations        
All in sustaining costs from Agbaou —    (23,930)   (15,891)   (50,011)  
All-in sustaining costs from all operations (358,824)   (140,984)   (686,636)   (297,045)  
Gold ounces sold 420,761    149,828    798,324    324,382   
All-in sustaining cost per ounce sold 853    941    860    916   

1Corporate G&A costs included in the calculation for all-in sustaining costs has been adjusted to exclude expenses associated to listing on the LSE of $8.2 million for the three and six months ended 30 June 2021.

The Company presents its sustaining capital expenditures in its all-in sustaining costs to reflect the capital expenditures related to producing and selling gold from its on-going mine operations. The distinction between sustaining and non-sustaining capital reflects the definition set out by the World Gold Council. Non-sustaining capital is capital expenditure incurred at new projects and costs related to major projects or expansions at existing operations where these projects will materially benefit the operations. This non‐GAAP measure provides investors with transparency regarding the capital costs required to support the on-going operations at its mines, relative to its total capital expenditures. Readers should be aware that these measures do not have a standardised meaning. It is intended to provide additional information and should not be considered in isolation, or as a substitute for measures of performance prepared in accordance with IFRS.

Table 38: Sustaining and Non-Sustaining Capital

  THREE MONTHS ENDED SIX MONTHS ENDED
($'000s) 30 June
2021
30 June
2020
30 June
2021
30 June
2020
         
Expenditures on mining interests 139,102    58,325    257,982    112,277   
Non-sustaining capital expenditures1 (58,268)   (22,109)   (115,114)   (39,829)  
Non-sustaining exploration (26,762)   (17,346)   (33,036)   (32,492)  
Growth projects (12,563)   (2,086)   (40,503)   (4,200)  
Sustaining Capital1 41,509    16,784    69,329    35,756   

1Non-sustaining and sustaining capital expenditures include amounts incurred at the Agbaou mine.

Table 39: Consolidated Sustaining Capital

  THREE MONTHS ENDED SIX MONTHS ENDED
($’000s) 30 June 2021 30 June 2020 30 June 2021 30 June 2020
Boungou 8,955    n.a. 13,065    n.a.
Houndé 8,602    11,117    13,304    22,891   
Ity 7,102    2,253    12,340    3,376   
Karma 258    2,028    482    2,667   
Mana 5,215    n.a. 8,020    n.a.
Sabodala-Massawa 8,923    n.a. 18,446    n.a.
Wahgnion 2,454    n.a. 3,449    n.a.
Sustaining capital from continuing operations 41,509    15,398    69,106    28,934   
Agbaou —    1,386    223    6,822   
Total sustaining capital from all operations 41,509    16,784    69,329    35,756   

Table 40: Consolidated Non-Sustaining Capital

  THREE MONTHS ENDED SIX MONTHS ENDED
($’000s) 30 June 2021 30 June 2020 30 June 2021 30 June 2020
Boungou 3,932    n.a. 8,425    n.a
Houndé 2,985    5,750    9,681    7,565   
Ity 8,376    10,746    20,423    21,693   
Karma 2,073    3,838    2,895    5,912   
Mana 21,093    n.a. 45,165    n.a
Sabodala-Massawa 5,178    n.a. 9,741    n.a.
Wahgnion 9,011    n.a. 12,758    n.a.
Non-mining 5,621    1,459    6,002    4,209   
Consolidated non-sustaining capital 58,268    21,793    115,090    39,379   
Agbaou —    316    25    450   
Total non-sustaining capital from all operations 58,268    22,109    115,115    39,829   

ADJUSTED NET EARNINGS AND ADJUSTED NET EARNINGS PER SHARE

Net earnings have been adjusted for items considered exceptional in nature and not related to Endeavour’s core operation of mining assets. The presentation of adjusted net earnings may assist investors and analysts to understand the underlying operating performance of our core mining business. However, adjusted net earnings and adjusted net earnings per share do not have a standard meaning under IFRS. They should not be considered in isolation, or as a substitute for measures of performance prepared in accordance with IFRS and are not necessarily indicative of operating profit or cash flow from operations as determined under IFRS.

The following table reconciles these non‐GAAP measures to the most directly comparable IFRS measure.

Table 41: Adjusted Net Earnings

  THREE MONTHS ENDED SIX MONTHS ENDED
($'000s) 30 June
2021
30 June
2020
30 June
2021
30 June
2020
Total net and comprehensive earnings/(loss) 148,949    (22,616)   256,178    12,847   
Net loss/(earnings) from discontinued operations —    (7,902)   3,702    (15,883)  
Deferred income tax (recovery)/expense (2,166)   5,597    3,504    6,504   
Loss/(gain) on financial instruments 14,807    72,257    (27,270)   74,956   
Other expenses/(income) 7,082    1,791    10,510    (144)  
Share-based compensation 9,839    4,942    17,794    6,565   
Acquisition and restructuring costs 14,544    2,589    26,704    6,919   
Non-cash and other adjustments1 15,293    1,926    39,692    1,926   
Adjusted net earnings 208,348    58,584    330,814    93,690   
Attributable to non-controlling interests 25,201    9,367    54,493    20,024   
Attributable to shareholders of the Corporation 183,147    49,217    276,321    73,666   
Weighted average number of shares issued and outstanding 251,779,650    110,993,240    230,008,280    110,788,798   
Adjusted net earnings from continuing operations per basic share 0.73    0.44    1.20    0.66   

1 Non-cash and other adjustments in Q1-2021 mainly relate to non-cash depreciation of inventory associated with the fair value bump on purchase price allocation of SEMAFO and Teranga.

OPERATING CASH FLOW PER SHARE

The Company believes that, in addition to conventional measures prepared in accordance with GAAP, certain investors use free cash flow to assess the Company’s ability to generate and manage liquid resources. These terms do not have a standard meaning and are intended to provide additional information. They should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP.

Table 42: Operating Cash Flow (OCF) and Operating Cash Flow (OCF) per share

  THREE MONTHS ENDED SIX MONTHS ENDED
($'000s) 30 June
2021
30 June
2020
30 June
2021
30 June
2020
Operating cash flow        
Cash generated from operating activities by continuing operations 300,475    53,497    507,218    153,396   
Changes in working capital from continuing operations (14,825)   21,412    41,850    16,842   
Operating cash flows before working capital from continuing operations 285,650    74,909    549,068    170,238   
Divided by weighted average number of outstanding shares, in thousands 251,780    110,993    230,008    110,789   
Operating cash flow per share from continuing operations $ 1.19    $ 0.48    $ 2.21    $ 1.38   
Operating cash flow per share before working capital from continuing operations $ 1.13    $ 0.67    $ 2.39    $ 1.54   


NET DEBT, NET CASH/ADJUSTED EBITDA RATIO

The Company is reporting Net Debt/ Cash and Net Debt/ Cash/Adjusted EBITDA ratio. This non‐GAAP measure provides investors with transparency regarding the liquidity position of the Company. It is intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP. The calculation of net debt and net cash is shown in table 32. The following table explains the calculation of net debt, net cash/Adjusted EBITDA ratio using the last twelve months of Adjusted EBITDA.

Table 43: Net Debt, Net Cash/ Adjusted EBITDA ratio

($'000s) 30 June
2021
31 March
2021
Net Debt/(Cash) 77,123    (74,675)  
Trailing twelve month Adjusted EBITDA1 1,072,668    802,773   
Net Debt/(Cash) / Adjusted EBITDA LTM ratio 0.07    (0.09)  

1 Trailing twelve month Adjusted EBITDA is as reported in prior periods for each quarter prior to Q2-2021.

RETURN ON CAPITAL EMPLOYED

The Company uses Return on Capital Employed (“ROCE”) as a measure of long-term operating performance to measure how effectively management utilises the capital it has been provided. The calculation of ROCE, expressed as a percentage, is Adjusted EBIT (based on Adjusted EBITDA as per table 35 adjusted to include Adjusted EBITDA from discontinued operations) divided by the average of the opening and closing capital employed for the twelve months preceding the period end. Capital employed is the total assets less current liabilities.

Table 44: Return on Capital Employed

  TRAILING TWELVE MONTHS
($'000s unless otherwise stated) 30 June
2021
30 June
2020
Adjusted EBITDA 1,072,668    471,013   
Depreciation and amortization (473,084)   (205,406)  
Adjusted EBIT (A) 599,584    265,607   
Opening Capital employed (B) 1,807,766    1,753,857   
Total Assets 6,885,769    2,057,124   
Current Liabilities (640,593)   (249,358)  
Closing Capital employed (C) 6,245,176    1,807,766   
Average Capital Employed (D)=(B+C)/21 3,727,808    1,780,812   
ROCE (A)/(D) 16% 15%

1 Assets for Teranga and SEMAFO have been included in the calculation from the date of their acquisition by Endeavour on 10 February, 2021 and 1 July, 2020 respectively.

QUARTERLY AND ANNUAL FINANCIAL AND OPERATING RESULTS

The following tables summarise the Company’s financial and operational information for the last eight quarters and three fiscal years.

Table 45: 2021 - 2020 Quarterly Key Performance Indicators

 

    FOR THE THREE MONTHS ENDED
($'000s except ounces sold) Unit 30 June
2021
31 March
2021
31 December
2020
September 30
 2020
Gold ounces sold oz 420,761 363,518 300,622 236,292
Revenue $ 753,427    635,792    553,370    434,839   
Operating cash flows from continuing operations $ 300,475    204,907    383,992    173,174   
Earnings from continuing  mine operations $ 272,976    195,525    218,372    123,230   
Net comprehensive earnings $ 148,949    99,158    29,271    70,164   
Net comprehensive (loss)/earnings from discontinued operations $ —    (3,702)   (44,265)   13,094   
Net earnings from continuing operations attributable to shareholders $ 126,779    77,838    64,698    45,007   
Net (loss)/earnings from discontinued operations attributable to shareholders $ —    (5,168)   (48,180)   14,791   
Basic earnings per share from continuing operations $ 0.50    0.42    0.40    0.27   
Diluted earnings per share from continuing operations $ 0.50    0.42    0.40    0.27   
Basic earnings per share from all operations $ 0.50    0.43    0.11    0.36   
Diluted earnings per share from all operations $ 0.50    0.43    0.11    0.36   


Table 46: 2020 - 2019 Quarterly Key Performance Indicators

    FOR THE THREE MONTHS ENDED
($'000s except ounces sold) Unit 30 June
2020
31 March
2020
31 December
2019
30 September
2019
Gold ounces sold oz 124,761 147,131 139,058 149,187
Revenue $ 209,581    226,321    199,406    213,918   
Operating cash flows from continuing operations $ 53,529    29,757    92,006    72,822   
Earnings from continuing mine operations $ 75,583    72,182    44,757    64,974   
Net comprehensive (loss)/earnings $ (22,616)   35,463    (113,076)   (23,545)  
Net comprehensive earnings from discontinued operations $ 1,392    7,978    2,790    6,282   
Net (loss)/earnings from continuing operations attributable to shareholders $ (38,488)   19,366    (111,662)   (37,160)  
Net earnings/(loss) from discontinued operations attributable to shareholders $ 1,259    6,632    (1,507)   4,961   
Basic (loss)/earnings per share from continuing operations $ (0.35)   0.18    (1.02)   (0.34)  
Diluted (loss)/earnings per share from continuing operations $ (0.35)   0.18    (1.02)   (0.34)  
Basic (loss)/earnings per share from all operations $ (0.34)   0.24    (1.03)   (0.29)  
Diluted (loss)/earnings per share from all operations $ (0.34)   0.24    (1.03)   (0.29)  

Table 47: Annual Key Performance Indicators1

  FOR THE YEAR ENDED
($'000s except per share amounts) 31 December 2020 31 December 2019 31 December 2018
Gold ounces sold 808,806    511,749    469,544   
Revenue 1,424,111    694,848    571,701   
Operating cash flows from continuing operations 710,563    205,531    196,371   
Operating cash flows from discontinued operations 38,365    96,354    54,549   
Earnings/(Loss) from continuing mine operations 337,564    (27,502)   53,568   
Net and comprehensive earnings/(loss) from continuing operations 134,085    (159,974)   127,609   
Net and comprehensive (loss)/earnings from discontinued operations (21,803)   18,814    (110,549)  
Net earnings/(loss) from continuing operations attributable to shareholders 95,243    (174,506)   (37,675)  
Net earnings/(loss) attributable to shareholders 72,528    (163,718)   (144,856)  
Basic earnings/(loss) per share from continuing operations 0.69    (1.59)   (0.35)  
Diluted earnings/(loss) per share from continuing operations 0.69    (1.59)   (0.35)  
Basic earnings/(loss) per share 0.53    (1.49)   (1.00)  
Diluted earnings/(loss) per share 0.53    (1.49)   (1.00)  
Total assets 3,881,718    1,872,791    1,922,043   
Total long term liabilities (excluding deferred taxes) 792,740    738,294    660,472   
Total attributable shareholders' equity 2,057,015    717,867    858,006   
Adjusted net earnings per share2 2.28    0.33    0.49   

1 Prior year figures for continuing operations have been adjusted to exclude Agbaou.
2 The adjusted net earnings per share is inclusive of the prior period tax adjustment included in the 31 December 2018 adjusted earnings per share.

PRINCIPAL RISKS AND UNCERTAINTIES

Readers of this Management Report should consider the information included in the Company’s condensed interim consolidated financial statements and related notes for the six months ended 30 June 2021. The nature of the Company’s activities and the locations in which it works mean that the Company’s business generally is exposed to significant risk factors, many of which are beyond its control. The Company examines the various risks to which it is exposed and assesses any impact and likelihood of those risks. For discussion on all the risk factors that affect the Company’s business generally, please refer to the prospectus prepared as part of the admission to the premium listing segment of the Official List and to trading on the Main Market of the London Stock Exchange (the “Prospectus”) and which is available on its website, www.endeavourmining.com, its most recent Annual Information Form filed on SEDAR at www.sedar.com, and the consolidated financial statements for the year ended 31 December 2020. The risks that affect the financial statements specifically, and the risks that are reasonably likely to affect them in the future which are incorporated by reference in this Management Report, are set out below.

There have been no significant changes to the principal risks and uncertainties of the Company from those disclosed in the Prospectus. The principal risks that affect the Company’s business are listed below:

External risks

Gold price

Exchange rates

Inability to compete successfully with other mining companies

Global economic conditions

Effect of COVID-19 on the business

Climate change

Fixed and floating gold delivery obligations

Operational risks

Mining, development and exploration activities are subject to operational risks and hazards inherent in the mining industry, such as geological problems, seismic activity, flooding, metallurgical and other processing problems, etc.

Risks and potential liabilities related to our tailings storage facilities.

Risks and expenses related to reclamation costs and related liabilities.

The Company’s ability to maintain or increase the present level of gold production is dependent in part on the Company’s development projects, which are subject to numerous known and unknown risks.

No assurance can be given that the current or future mineral production estimates will be achieved.

Future exploration and development projects may not results in economically viable mining operations or yield new reserves.

Risks associated with illegal or artisanal mining, which may, among other things, create environmental, health and safety risks.

Surrounding communities may affect mining operations through restriction of access of supplies and workforce to mine site or through legal challenges asserting ownership rights.

The Company depends on management and skilled personnel and may not be able to attract and retain qualified personnel in the future.

French officials are conducting a judicial inquiry into certain past employees of Areva S.A. (“Areva”), including into our CEO Sébastien de Montessus in relation to his time as an employee of Areva, which could lead to negative publicity and/or reputational damage for the Group, and which could have an adverse impact on his ability to continue in his role.

The Company is dependent on its workforce, and the workforce of its third-party contractors, to extract and process minerals containing gold, and are therefore sensitive to any labour disruption at its properties.

Risks associated with use of third-party contractors.

The Company may require further licences and encounter title claims to develop and realise certain gold reserves or to process the ore of third parties and may encounter title claims to any of its properties which may result in future losses or additional expenditures.

The Company may be adversely affected by the availability and costs of key inputs.

Legal and regulatory risks

The Company is subject to a number of laws and regulations and may not be able to enforce our legal rights.

The Company’s activities are extensively regulated in respect of environmental, health and safety standards which are likely to become more stringent over time and may be subject to unforeseen changes.

The Company’s business is subject to evolving climate change initiatives and legislation that may increase both compliance costs and the risk of non-compliance.

Government regulation may have an adverse effect on the Company’s exploration, development and mining operations.

The Company may be adversely affected by violations of applicable anti-corruption laws, as well as export control regulations and related laws and economic sanctions programmes.

The Company may face the risk of litigation in connection with its business and other activities.

Other risks

The Company may fail to successfully integrate acquired properties, including those acquired from SEMAFO and Teranga.

The Company may face IT and cyber security threats.

The Company’s business requires substantial capital expenditure and there can be no assurance that such funding will be available on a timely basis, or at all

The Company’s use of derivative instruments involves certain inherent risks, including credit risk, market liquidity risk, and unrealised mark-to-market risk.

The Company’s insurance coverage does not cover all of our potential losses, liabilities and damage related to our business, and certain risks are uninsured or uninsurable

Risks related to operations in West Africa

The Company is subject to geopolitical and other risks associated with operating in West Africa.

The location of the Company’s assets subjects the Company to safety and security risks.

The Company’s continued operations depend on adequate infrastructure, which is underdeveloped in certain parts of West Africa, and the uninterrupted flow of power, materials, supplies and services.

The Company’s mining properties are subject to various government equity interests and royalty payments payable to the respective governments of the countries in which we operate.

There are health risks associated with the mining work force in Africa.

Risks related to shares

Shares in the Company may be subject to market price volatility and the market price of the Shares in the Company may decline disproportionately in response to developments that are unrelated to the Company’s operating performance.

The current value of Old Endeavour Shares cannot be taken as indicative of the likely development of the market and future demand for the Shares.

Future sales of Shares by major shareholders could depress the price of the Shares.

The issuance of additional Shares in the Company in connection with future acquisitions, any share incentive or share option plan or otherwise may dilute all other shareholdings.

The Company’s ability to pay dividends in the future depends, among other things, on the Group’s financial performance and capital requirements.

The Company is a holding Company with no business operations of its own and depends on its subsidiaries for cash, including in order to pay dividends.

Shareholders may become subject to foreign exchange rate risk as a result of an investment in the Shares.

Shareholders in the United States and other jurisdictions outside of the United Kingdom may not be able to participate in future equity offerings.

The rights afforded to Shareholders are governed by English law. Not all rights available to shareholders under US law will be available to holders of the Shares.

The Company’s activities expose it to a variety of risks that may include credit risk, liquidity risk, currency risk, interest rate risk and other price risks, including equity price risk. The Company examines the various financial instrument risks to which it is exposed and assesses any impact and likelihood of those risks.

Credit risk

Credit risk is the risk that the counterparty to a financial instrument will cause a financial loss for the Company by failing to discharge its obligations. Credit risk arises from cash, restricted cash, marketable securities, trade and other receivables, long-term receivable and other assets.

The Company manages the credit risk associated with cash by investing these funds with highly rated financial institutions, and by monitoring its concentration of cash held in any one institution. As such, the Company deems the credit risk on its cash to be low.

The Company closely monitors its financial assets and does not have any significant concentration of credit risk other than receivable balances owed from the governments in the countries the Company operates in and its other receivables of $14.6 million due from third parties. The Company monitors the amounts outstanding from its third parties regularly and does not believe that there is a significant level of credit risk associated with these receivables given the current nature of the amounts outstanding and the on-going customer/supplier relationships with those companies.

The Corporation sells its gold to large international organizations with strong credit ratings, and the historical level of customer defaults is minimal. As a result, the credit risk associated with gold trade receivables at 30 June 2021 is considered to be negligible. The Company does not rely on ratings issued by credit rating agencies in evaluating counterparties’ related credit risk.

Liquidity risk

Liquidity risk is the risk that the Company will encounter difficulty in meeting obligations associated with its financial liabilities that are settled by delivering cash, physical gold or another financial asset. The Company has a planning and budgeting process in place to help determine the funds required to support the Company’s normal operating requirements. The Company ensures that it has sufficient cash and cash equivalents and loan facilities available to meet its short term obligations.

Currency risk

Currency risk relates to the risk that the fair values or future cash flows of the Company’s financial instruments will fluctuate because of changes in foreign exchange rates. Exchange rate fluctuations may affect the costs that the Company incurs in its operations. There has been no change in the Company’s objectives and policies for managing this risk during the period ended 30 June 2021.

The Company has not hedged its exposure to foreign currency exchange risk.

Interest rate risk

Interest rate risk is the risk that future cash flows from, or the fair values of, the Company’s financial instruments will fluctuate because of changes in market interest rates. The Company is exposed to interest rate risk primarily on its long-term debt. Since marketable securities and government treasury securities held as loans are short term in nature and are usually held to maturity, there is minimal fair value sensitivity to changes in interest rates. The Company continually monitors its exposure to interest rates and is comfortable with its exposure given the relatively low short-term US interest rates and LIBOR.

CONTROLS AND PROCEDURES

DISCLOSURE CONTROLS AND PROCEDURES

Disclosure controls and procedures are designed to provide reasonable assurance that all relevant information is gathered and reported on a timely basis to senior management, including the Chief Executive Officer (CEO) and the Chief Financial Officer (CFO). Additionally, these controls and procedures provide reasonable assurance that information required to be disclosed in the Company’s annual and interim filings (as such terms are defined under National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings) and other reports filed or submitted under Canadian securities law is recorded, processed, summarised and reported within the time periods specified by those laws, and that material information is accumulated and communicated to management including the CEO and CFO as appropriate to allow timely decisions regarding required disclosure.

Management evaluated the design and operating effectiveness of the Company’s disclosure controls and procedures as required by Canadian Securities Law. Based on that evaluation, the CEO and CFO concluded that as of 31 December 2020, the disclosure controls and procedures were effective.

INTERNAL CONTROLS OVER FINANCIAL REPORTING

The Company’s management, including the CEO and CFO, is responsible for establishing and maintaining adequate internal controls over financial reporting. Under the supervision of the CFO, the Company’s internal controls over financial reporting are designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with IFRS.

There have been no material changes in the Company’s internal controls over financial reporting since the year ended 30 June 2021 that have materially affected or are reasonably likely to materially affect the Company’s internal controls over financial reporting.

The Company assessed the SEMAFO and Teranga mines’ disclosure controls and procedures and internal control over financial reporting; however, in accordance with National Instrument 52-109 - Certification of Disclosure in Issuer’s Annual and Interim Filings, because the SEMAFO operations were acquired not more than 365 days before the end of 31 December 2020, the Company has limited the scope of its design of disclosure controls and procedures and internal controls over financial reporting to exclude the controls, policies and procedures of SEMAFO.

LIMITATIONS OF CONTROLS AND PROCEDURES

The Company’s management, including the CEO and CFO believe that any disclosure controls and procedures or internal control over financial reporting, can provide only reasonable, but not absolute, assurance that the objectives of the control system are met. These inherent limitations include the realities that judgments in decision making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the actions of one individual, by collusion of two or more people, or by unauthorised override of the control. Accordingly, because of the inherent limitations in a control system, misstatements due to error or fraud may occur and not be detected.

DIRECTORS’ RESPONSIBILITY STATEMENT

The directors of Endeavour Mining plc confirm that to the best of their knowledge:

the condensed interim consolidated financial statements for the six months ended 30 June 2021 has been prepared in accordance with UK adopted International Accounting Standard 34, “Interim Financial Reporting”, and International Accounting Standard 34, “Interim Financial Reporting” as issued by the International Accounting Standards Board (IASB), and that it gives a true and fair view of the assets, liabilities, financial position and profit or loss of the Company and the undertakings included in the consolidation taken as a whole; and

the interim management report includes a fair review of the information required by DTR 4.2.7 and DTR 4.2.8

The Directors of Endeavour Mining plc are listed on the Company’s website at www.endeavourmining.com

By order of the Board

/s/ Sebastien de Montessus

Chief Executive Officer
Sebastien de Montessus
3 August 2021

INDEPENDENT REVIEW REPORT TO ENDEAVOUR MINING PLC

Introduction

We have been engaged by the Company to review the condensed set of financial statements in the interim financial report for the three and six months ended 30 June 2021 which comprises the condensed interim consolidated statement of comprehensive earnings/ loss, the condensed interim consolidated statement of cash flows, the condensed interim consolidated statement of financial position, the condensed interim consolidated statement of changes in equity and related notes.

We have read the other information contained in the interim financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

Directors’ responsibilities

The interim financial report is the responsibility of and has been approved by the directors. The directors are responsible for preparing the interim financial report in accordance with the Disclosure Guidance and Transparency